NBCSL Committee Jurisdiction: Energy, Transportation, and Environment

Applicable Resolutions: ETE-08-05, ETE-09-23, ETE-10-07, ETE-12-09

The Regional Greenhouse Gas Initiative is the first mandatory, market-based carbon dioxide (CO₂) emissions reduction program in the United States. There is model legislation that uniformly covers nine states in the Northeast and Mid-Atlantic regarding renewable portfolio standards. These states have established a Renewable Portfolio Standard (RPS) that requires utility companies to supply a certain percentage of electricity from renewable resources. Nine states formed a cooperative called the Regional Greenhouse Gas Initiative (RGGI): Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.

The goal of the RGGI is to reduce CO₂ emissions from the power sector by 10% by the end of 2018. The RGGI has set an overall regional CO₂ emissions cap, which will be reduced by 2.5% each year between 2015 and 2018. Facilities covered under the RGGI are allocated CO₂ emission allowances. If a facility reduces its emissions below its allowances, the facility can then sell the extra allowances to plants that are emitting more than their allowances. Utility companies will be able to use a CO₂ emission allowance issued by any of the ten participating states to comply with the state program covering their facility. The premise of the RGGI is that setting a price on emissions will incentivize the utilities to reduce their emissions. 

To date, the regional cooperative has generated almost $1 billion in carbon auction revenue and created 16,000 jobs. Despite the successes, there are concerns surrounding renewable portfolio standards and efforts to curb carbon emissions from the energy production sector. This concern is predominantly around the increase in tax rates. If energy companies have to offset their carbon intensity through adopting renewable energy, implementing conservation, and creating more efficiencies-these costs are typically passed onto the rate payers. However, this has not been the case in the RGGI model. In fact, energy companies have realized a decrease in costs to run their plants. Ultimately, adoption of renewable energy means savings in reduced labor, maintenance, and replacement.

Nevertheless, some members of the public perceive these legislative initiatives as energy taxes, which is why Americans for Prosperity sued the State of New York for its adoption of the RGGI model legislation through administrative action.

RGGI creates wealth for a state by setting up a carbon trading market by which carbon credits can be bought from the state and traded among participating companies. The revenues generated from this activity are typically used by states for environmental conservation efforts or job training in the green industry. However, some states (NH, NJ, and NY) have used the funds to balance their budgets, which lends to the argument that RGGI is financed by hidden taxes. The lesson that should be derived from this is that states considering such models should be clear about how the revenues will be spent and enact controls to stave off any deviations.

MARYLAND

Healthy Air Act (HHA), Emission Limitation for Power Plants

Sponsors: Sen. Joan Carter Conway*, Sen. Lisa A. Gladden*, Sen. Verna L. Jones-Rodwell*, Sen. Delores G. Kelley*, and Sen. Nathaniel J. McFadden*

Background: Maryland is a part of RGGI, but credits its participation in the cooperative to a piece of state legislation called the Maryland Healthy Air Act of 2006 (HAA). [1] HAA is the toughest power plant emission law on the East Coast. 

Summary: The Maryland Department of the Environment is charged with implementing the HAA through regulations. The HAA regulations constitute the most sweeping air pollution emission reduction measure in Maryland history. The HAA regulations became effective on July 16, 2007.

Goal: To reduce greenhouse gas emissions through involvement with RGGI. A simultaneous goal is to reduce nitrogen oxide (NO_x), sulfur dioxide (SO₂), and mercury emissions from large coal burning power plants.

MASSACHUSETTS

CO2 Budget Trading Program

Background: The RGGI has allowed Massachusetts to set prices on emissions, which the utility sector will use as an incentive to reduce its greenhouse gas emissions.  

Goal: To curb the amount of carbon dioxide emissions through a cost-effective manner, thereby reducing the utility rates for consumers.

Results: The CO₂ Budget Trading Program resulted in the sale of 370 million allowances, which totaled $700 million in revenue for Massachusetts. In addition, electricity costs in RGGI states have decreased. In Massachusetts alone, $140 million in RGGI proceeds has saved consumers $6 billion in energy costs over three years. Through the enactment of this program, Massachusetts has since gained 3,800 jobs and benefited from $500 million in economic activity. These results can be credited to its Carbon Dioxide Cap and Trade Program, available at http://www.malegislature.gov/Laws/GeneralLaws/PartI/TitleII/Chapter21A/Section22.

NEW YORK STATE

CO2 Budget Trading Program

Background: New York has benefitted from its participation with RGGI, as seen through the implementation of its CO₂ Budget Trading Program, which is designed to stabilize and then reduce anthropogenic emissions of CO₂ from CO₂ budget sources in an economically efficient manner. The New York Department of Environmental Conservation achieves this in a unique way by mandating participation through its existing regulatory authority. The state’s department has enough authority from previously passed measures to mandate that the energy produced in the New York State achieve a carbon offset. This is a rare amount of authority to grant a state agency, but it has proven to be effective.

Goal: Like RGGI’s goal, the goal of New York’s Budget Training program is to reduce carbon emissions and decide how to spend revenue generated by the trading of carbon credits. To see the CO₂ Budget Trading Program’s general provisions for New York State, visit http://www.dec.ny.gov/regs/47181.html#47191.

Results: Through 2010, New York has committed $150 million of RGGI proceeds to twelve consumer benefit programs that reduce greenhouse gas emissions while promoting energy efficiency and renewable energy. These investments save consumers money, create jobs, reduce the flow of dollars outside the state for imported fossil fuels, and protect public health and the environment.[2] Specifically, New York’s program has resulted in annual electricity savings of 50,000 MWh and energy bill savings of $28 million per year; as well as supported green job training programs for 6,000 workers.