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The Regional Greenhouse Gas Initiative

by Jonathan Carter


On June 18th the Governor of Maine signed into law a bill committing the state to a regional effort to cap and then reduce the amount of carbon dioxide power plants can emit. Currently the Regional Greenhouse Gas Initiative (RGGI) includes ten states – Maine, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

While this has been touted as the first in the nation attempt to limit greenhouse gases through a mandatory, market based cap-and-trade program, it is going to have limited impact. RGGI’s requirements are meant to cap fossil fuel power plants’ emissions at current levels between 2009-2014 and then reduce those caps by 2.5% between 2015-2018 so that by 2019 levels are at least 10% below 2009 levels. While the intent of reduction is positive, it is extremely modest when considering that reductions need to be in the range of 80% below 1990 levels by 2050. While the mandatory reductions, as small as they are, should be applauded, the trade component of the carbon credits generated undercuts the effort to reduce and eliminate the carbon emissions. Indeed, a power plant will be able to buy back its reductions through an auction of the carbon credits accumulated by the various states. The first of the auctions is scheduled for September 25th, 2008

According to RGGI, each state will be required to spend at least 25% of its take from selling its allowances on energy or consumer benefit purposes. Possible expenditures could include ratepayer rebates, or investments in energy efficiencies and clean energy technologies. The rest of the allowance proceeds (75%) can be spent as each state wishes. While this may sound good, it must be remembered that the allowances are being bought by other companies because it is cheaper for them to buy the allowances rather than to clean up their act and stop polluting. The states are excited about this approach because it provides them with an additional source of revenue. At an estimated allowance price of $5 per ton, Maine could conceivably generate 30 million dollars annually. While 7.5 million has to be spent on energy related benefits, what about the other 22.5 million? Shouldn’t all the funds be used to reduce our carbon footprint?

My concern about RGGI and other cap and trade schemes is that they are really only a shell game. Yes, power plant A has to reduce its emissions of greenhouse gases but the greenhouse gases will not be eliminated because power plant B or C… or some other polluting industry can purchase back the reductions from the state. The system of cap and trade is also very complex. It requires huge oversight with independent verification and enforcement.

One thing that is good about RGGI is that at least the states are demonstrating a willingness to explore ways to reduce their carbon footprint. This puts them miles ahead of the federal government. What the state and federal governments do not seem to understand is that by not moving forward vigorously with a mandatory requirement of reducing emissions by 80% below 1990 levels by 2050 (California has set this target), the costs will be far greater both in ecological and economic terms. Moving away from a market based approach like RGGI is the only way it will be possible to achieve the necessary reductions. RGGI may make some environmentalists feel good, but in my opinion it just breeds a degree of complacence. A complacence we can ill afford. Yes, mitigating global warming is going to require some significant economic hardships as well higher taxes. Unless government steps up to the plate and says no to emissions and is willing to admit to the economic pain and sacrifice necessary, the prognosis is not good. RGGI reminds me of the guy who thinks he can have his cake and eat it too. RGGI for all intents and purposes is “business as usual”. “Business as usual” is exactly why we find ourselves in this crisis, and it is certainly not the answer. Albert Einstein once said "We can't solve problems by using the same kind of thinking we used when we created them”.


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This website is maintained by Paul Donahue. Please contact him at editor@forestecologynetwork.org with problems or suggestions regarding these pages.