As climate talks continue in Paris, New York and eight other mid-Atlantic states earned over $115 million this week from the sale of carbon allowances- $7 million more than projected. This week’s carbon auction, the third of four such auctions this fiscal year, was organized by the Regional Greenhouse Gas Initiative, a “wildly successful” nine-state carbon trading program.
New York State’s share of the proceeds from the auction was $44.3 million. The funds will go toward energy efficiency and clean energy programs.
The Regional Greenhouse Gas Initiative, RGGI, is designed to both cap and reduce power sector CO2 emissions emitted by participating states. Since the program’s inception, thirty RGGI auctions have collectively delivered $895 million for clean power, energy efficiency, technology innovation and green workforce development projects across New York. Projects have been initiated in every county, say advocates.
Paying to Emit Carbon Pollution
RGGI includes New York State, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, Rhode Island and Vermont. It is the “first mandatory, market-based CO2 emissions reduction program in the United States.”
New Jersey was a participant in RGGI but Governor Chris Christie pulled the state out of the program in 2011.
Power plants in RGGI states must pay to emit carbon pollution. They participate in “auctions” in which they purchase “carbon allowances.” The price for these allowances is guided by a cap on how much carbon all RGGI states can collectively emit.
The idea is to keep lowering the cap in order to raise the allowance price- thus incentivizing power plants to switch to less polluting sources of energy. RGGI’s price on carbon allowances (currently $7.50 per allowance) has increased 256 percent in two years.
RGGI has implemented a new carbon emissions cap of 91 million short tons for participating states. That cap is supposed to decline 2.5 percent each year from 2015 to 2020.
Does RGGI Work?
Supporters say RGGI is a national model for reducing carbon emissions and accelerating the use of renewable sources of energy.
Climate pollutant emissions from power plants across the region have dropped by more than 40 percent since RGGI was initiated in 2005, a coalition of 26 environmental and clean energy groups wrote in a February 10th letter to Governor Cuomo.
The program has raised almost $2 billion from auction proceeds across the nine participating states since 2008. RGGI has “defied critics by proving that reducing climate-altering pollution in a way that raises funds for clean energy is a true win-win,” says Albany watchdog group Environmental Advocates.
New York, as the largest state in the coalition, and the one with the most pollution emitted, received a little more than one-third of all RGGI proceeds in 2014. The funds are managed by the New York State Energy Research and Development Authority.
RGGI’s success has proved dangerous. In this year’s state budget, Governor Cuomo reportedly “raided” as much as $41 million (more than one-fourth of 2014’s proceeds) from RGGI, despite significant opposition. Twenty-three million of what was taken this year was to go directly to the state’s general fund to help offset “various energy related tax credits.”
Buildings = Carbon Pollution
A major portion of RGGI funds have been directed toward making the state’s residential building stock more energy efficient. New York’s buildings -residential, commercial and industrial- are the state’s second leading emitter of greenhouse gases, surpassed only by the transportation sector.
In New York City, buildings are the number one source of carbon pollution.
RGGI has paid for over 30,000 free or reduced-cost energy audits for New York State homeowners. It also helps to fund low-cost energy efficiency retrofits for single and multi-family buildings.
Two Steps Forward, One Step Back
As RGGI’s financial success continues, Governor Cuomo has moved to codify the goal that 50 percent of New York’s electricity will come from renewable sources by 2030.
The state is also calling attention to the fact that Congress passed two joint resolutions this week seeking to overturn the Obama administration’s Clean Power Plan, which restricts carbon emissions from the electricity sector. The resolutions now head to the White House.
“The people of New York expect more out of the Republican members of the New York Congressional Delegation who voted to disapprove of the Clean Power Plan,” said Basil Seggos, acting commissioner of the state’s Department of Environmental Conservation.
“The science has spoken and action to address climate change has bipartisan support,” Seggos continued. “It’s time for policy makers to act and protect our citizens from our uncertain climate future.”