Carbon pricing, the bogeyman of climate-change mitigation, still inspires terror in some US corporate executives and politicians, despite support from global businesses and governments. Opponents argue carbon pricing will cause electricity prices to skyrocket and make businesses less competitive.
But when it comes to reducing greenhouse gas emissions, it works as evidenced by a micro-experiment among Northeastern states.
The Northeastern states’ carbon-pricing program — the first mandatory cap-and-trade program in the US — has helped cut regional emissions by 37 percent since 2009, according a new report from the Acadia Center. At the same time the regional economy grew over 24 percent.
The program, called the Regional Greenhouse Gas Initiative or RGGI (pronounced Reggie), has also helped to raise more than $2.5 billion in revenue for regional clean energy and energy efficiency projects, which have saved businesses and consumers billions of dollars on their energy bills and reduced electricity rates by an average of 2 percent or more.
By comparison, other states have seen their electricity rates increase by more than 7 percent. This can’t be totally attributed to other states’ lack of carbon pricing. But proponents say the RGGI state’s reduced rates are at least in part because of this.
The study comes as governors of RGGI’s nine participating states — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont — meet to review RGGI and decide whether to extend the cap and trade program to 2030.
Earlier this week a group of more than 90 companies and investors sent a letter to the mayors urging them to extend RGGI and double down on its emissions cap.
The companies and investors, which include Autodesk, Calvert Investments, Eileen Fisher, Pax World Asset Management, Seventh Generation, Staples, Stonyfield, Thornton Tomasetti, and VF Corporation, are asking the governors to tighten the annual carbon emissions cap by 5 percent per year.
“Continuing reductions beyond 2020 will provide certainty for companies to plan and invest for the future, make the region an attractive place to do business, and continue to lower electricity rates for consumers,” the company signatories write.
Under the current structure, the region’s annual emissions cap decreases by 2.5 percent until 2020.
Peter Shattuck, who heads the Acadia Center Clean Energy Initiative, says raising the target to 5 percent and extending it for 10 years is necessary to reach the 2030 emissions standards set by the Clean Power Plan. “Anything short of doubling down will make it harder for states to achieve the reductions in climate pollution that we need to see,” he told Public News Service.
Anne Kelly, senior policy and BICEP director at Ceres, the nonprofit sustainability group that organized the letter, says extending RGGI to 2030 “will provide companies and investors with the economic certainty that they need at the level of ambition that is needed to address the climate challenge. As [the letter] demonstrates, tightening the emissions cap is a win-win for the economy and the planet.”
The 5 percent proposal is also more consistent with the region’s actual rate of carbon reductions, the companies say.
“Codifying the trend of 5 percent annual emission reductions in the RGGI region will further strengthen efforts to address climate change and provide additional economic opportunities through clean energy investments,” said Lisa Drake, director of sustainability innovation at Stonyfield.
RGGI does have opponents, and they — rightfully — argue that other factors such as the low cost of natural gas have significantly reduced the region’s emissions. They also say the cap-and-trade program is an income redistribution ploy that rewards the region’s most successful businesses.
In an interview with Environmental Leader, Kelly said she doesn’t have a sense of which way the participating state’s governors are leaning. But recent policy and clean energy procurement decisions in the region look promising.
As Jordan Stutt, an Acadia Center policy analyst points out in a blog: “Connecticut, Rhode Island, and Massachusetts are procuring significant quantities of hydroelectricity and renewable energy through a joint procurement, and soon-to-be-enacted legislation in Massachusetts will require additional procurements of hydroelectricity, offshore wind, and other renewables equivalent to approximately 30 percent to 40 percent of the Commonwealth’s electric consumption. New York has committed to a 50 percent renewable energy supply by 2030, and Rhode Island recently adopted a 40 percent renewable energy requirement by 2035.”
The business signatories, all of which have footprints in the nine RGGI states, also supported the Clean Power Plan and the Paris climate agreement. “This is a group that supports the low-carbon economy,” Kelly said.
“These companies are looking to get behind a cap-and-trade program that works and by every measure RGGI has been a stunning success,” she added. “As these businesses work to reduce their own emissions, they are going to support regional programs that do the same. For these companies, a program that is reducing emissions, increasing energy efficiency and decoupling energy use from economic growth is basically a no-brainer.”