RGGI urges EPA to use flexible market-based CO2 programs

The nine Northeast and Mid-Atlantic states that make up the Regional Greenhouse Gas Initiative (RGGI) have urged the U.S. Environmental Protection Agency (EPA) to empower states to use market-based programs to reduce greenhouse gases from power plants.

In comments filed with EPA, the RGGI states said they have successfully cut carbon dioxide (CO2) emissions by 40% since 2005. This makes RGGI a “proven model,” the states said. The “cap-and-trade, auction-and-invest” model has helped New England and the Mid-Atlantic make dramatic cuts in GHG emissions, the group said in comments filed Dec. 2 with EPA.

“We applaud the commitment of the United States Environmental Protection Agency (EPA) to tackle head-on the challenge of reducing carbon emissions from existing power plants, which comprise the nation’s largest source of greenhouse gas emissions,” the states said in their comments to EPA Administrator Gina McCarthy.

“RGGI’s experience illustrates the potential for the power sector to reduce emissions by substantially more than 17% from 2005 levels, which will help the United States to achieve the targeted economy-wide reductions of 17% by 2020,” the states said.

In 2005, the CO2 intensity of fossil generation in RGGI states was 1,694/lbs per net MWh and the CO2 intensity for total RGGI generation was 1,026/lbs per net MWh, according to the comments. By 2010, the CO2 intensity figures dropped to 1,393/lbs (fossil) and 841/lbs (total generation).

EPA is developing guidelines for state programs to reduce CO2 from power plants under Clean Air Act section 111(d).

The Northeast and Mid-Atlantic states participating in the second RGGI control period (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont) have implemented the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. Power sector CO2 emissions are capped at 165 million short tons for 2013.

RGGI enables compliance through market mechanisms that seek out the least expensive emission cuts across the region, say the participating states. RGGI states also tout the economic benefits of investment of auction proceeds from 2009 through 2011, the first three years of the regional program.

Such market mechanisms also encourage regional cooperation, the states say. “The RGGI cap ensures that emissions decrease across the region, even as it allows increases in some locations in order to reap the benefits of more efficient sources in those locations.”

Such regional efforts can provide “a simple, transparent, verifiable compliance system,” the RGGI states said in the filing.

The RGGI states say that EPA should provide equitable treatment to states, such as the RGGI states, that have taken action to lower GHG emissions prior to issuance of EPA’s new rule. In addition to the East Coast states in RGGI, California started its own CO2 trading program this year.

The Midwest Greenhouse Gas Reduction Accord (MGGRA) was a commitment by the governors of six Midwestern states and the premier of one Canadian province (Manitoba) to reduce greenhouse gases through a regional cap-and-trade program and other measures. The accord was signed in November 2007 as a part of the Midwestern Governors Association Energy Security and Climate Change Summit. Though MGGRA has not been formally suspended, participating states are evidently no longer pursuing it. 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.