New England and mid-Atlantic states participating in the Regional Greenhouse Gas Initiative have experienced a steep decline in carbon dioxide emissions from power plants over the past decade, and the cap-and-trade program has been a key driver of those cuts, according to a new report.
Since 2008, the year before the program launched, RGGI emissions from power plants have fallen 47% from 133 million short tons of carbon emissions to 70 million tons in 2018, even as the GDP of participating states has grown by 47%, outpacing growth in the rest of the country, the Acadia Center said in a Sept. 18 report.
"RGGI has successfully demonstrated the viability of a market-based program to reduce CO2 emissions from the power sector while generating benefits for participating states," the report said. As further evidence of the benefits of the program, the Analysis Group in 2018 found that the RGGI program from 2015 through 2017 was expected to lead to $1.4 billion in economic benefits through 2027 to participating states.
Under the RGGI program, the nine participating states — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont — each year offer a declining number of carbon dioxide emissions allowances in regional auctions. Owners of fossil-fired power plants buy the allowances or find ways to reduce their own carbon emissions. RGGI emissions have been well below the RGGI cap in every year of the program’s history, according to Acadia.
Acadia also found RGGI states have generated $3.2 billion in allowance auction proceeds, most of which have been invested in energy efficiency and renewable energy programs. In addition, RGGI-driven reductions in co-pollutant emissions have resulted in over $5.7 billion in health and productivity benefits. Moreover, electricity prices in RGGI states have fallen by 5.7%, while prices have increased in the rest of the country by 8.6%.
When RGGI was implemented, it was just the second program in the world to regulate carbon emissions, but now 57 national or subnational carbon pricing programs are in place, the report noted.
The RGGI program is expected to expand to include New Jersey in 2020, though efforts to include Virginia in the program are on hold. Meanwhile, a number of RGGI states, as well as some others, are mulling creating an RGGI-like program to curb emissions from the transportation sector.
