On climate change, more than RGGI is needed
Cheap natural gas played biggest role in reducing emissions so far
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Part of this solution must be putting a price on carbon dioxide emissions, and some states have already done so. Cap-and-trade is a system in which polluters must purchase a permit (called an allowance) for every ton of carbon dioxide they emit. The price of this allowance is determined by the market, and governments auction a decreasing number of them each year in order to guide emissions downward while raising revenue for climate change programs.
Two such programs exist in the United States. In the Northeast/Mid-Atlantic we have the Regional Greenhouse Gas Initiative, or RGGI, and in California there is the Western Climate Initiative, or WCI. While the programs are a step in the right direction, new research from Climate XChange reveals that these programs have actually been fairly weak. Without strengthening, they will not contribute enough to achieving our long-term emission mandates.
RGGI is hailed as a pinnacle achievement for successful climate policy in the Northeast. Launched in 2008, the program brought together 10 Northeast and Mid-Atlantic states –– Delaware, Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont –– to collaboratively put an annual limit on carbon dioxide emissions from power plants.
On the surface, these cap-and-trade programs look like a major success. In the RGGI region, electricity emissions have plummeted 40 percent as natural gas, hydroelectricity, and energy efficiency replaced coal-fired power. California made headlines this summer by hitting their 2020 emissions target four years early due to a booming solar industry, rebounding hydropower, and decreased reliance on coal-fired electricity imports.
Climate XChange just concluded a six-month investigation into both RGGI and WCI, and our findings reveal that these programs deserve little credit for these trends. Larger market forces and other policies, such as incentives for renewable energy and energy efficiency, are responsible for the overwhelming majority of reductions in these regions.
Here in the RGGI region, natural gas prices have plummeted 70 percent since 2008, which had 20 times the impact of RGGI in facilitating the region’s transition away from coal. Energy efficiency investments and Canadian hydroelectricity have also played an important role, while RGGI has provided only a tenth of public funding for efficiency, hydro’s growth has been due mainly to its low price.
California’s program boasts a greater scope and higher allowance prices, but still cannot claim much credit for recent emission cuts. Neither their recent solar boom or rebound in hydropower are due to cap-and-trade, and emissions from the largest sector, transportation, continue to rise. Further, there are significant concerns around imported electricity and surplus allowances, both of which threaten the environmental integrity of the program.
There’s room for nuance here. These programs are a step in the right direction. Both RGGI and WCI stand as proof that states and Canadian provinces can put a price on carbon while providing economic benefits to the region. But far more is required to hit emission mandates for 2030 and beyond.
From heat waves, to storm surges and unprecedented flooding, Massachusetts is critically vulnerable to a warmer world. While we have set ambitious emission reduction requirements, recently released data by the Baker administration suggests that Massachusetts has lost ground in the past few years, resuming a slow upward crawl.
The good news is we know what needs to happen. Cap-and-trade must be expanded beyond the electricity sector or involved states must directly impose fees on carbon pollution from transportation and heating fuels. In both cases, carbon prices will likely need to be much higher to spur the reductions necessary through 2030 and beyond.
We now have a decade of technical experience with carbon pricing programs. It is entirely within our capacity to devise a program that creates meaningful impacts on emissions. The best part about putting a price on carbon is that we can simultaneously spur green innovation, strengthen the economy, and protect our communities from harmful pollutants and the effects of climate change.In order to do so, we must get serious about the ambition and scope of RGGI and WCI and stop giving them more credit than they are due. There is political risk in raising criticisms of these programs, but to avoid candid conversation presents a greater risk ––that we perpetuate weak program design into the next decade, miss our long-term emission mandates, and create dire climate consequences for the future.
Jonah Kurman-Faber is a research associate at Climate XChange, a Boston organization focused on research, insights and advocacy for carbon pollution pricing.