Public Policy and Economics

Addressing Greenhouse Gas Emissions Through the Regional Greenhouse Gas Initiative

Overview

Power Plants
Figure 1. Location of power plants that are within the RGGI region. The larger the gray circle, the greater the emissions of GHG.

The Regional Greenhouse Gas Initiative (RGGI) is a multi-state plan to reduce greenhouse gas (GHG) emissions from electric power plants over 10 states of the northeast from Maine to Maryland. The RGGI region covers 130,000 sq miles, is 60% forested, is 17% farmland, and has a population of about 50 million. The region emits about 10% of all US GHGs and has a $2.4 trillion economy that comprises about 19% of the US economy.

RGGI's  goals are to reduce GHG emissions by 10% below the 2002-2004 average by 2019, to set an emissions cap of 188 million tons of CO2, to establish a price for carbon, to encourage innovation and efficiency, to provide regulatory certainty for electricity generators, and to establish a model for a national US program.

At the Woods Hole Research Center, scientists are characterizing land cover types in the RGGI region, determining the spatial distribution of carbon stocks and determining the current net sources and sinks of carbon from the land. WHRC scientists are also evaluating the potential for future carbon sequestration and releases of C. This research will provide RGGI with system for calculating current and potential sources and sinks of carbon from land use change and land management.

RGGI Background

The RGGI program started January 1, 2009, and had been preceded by two auctions of CO2 emission allowances. The program began out of concerns regarding a lack of a national GHG reduction program and because of worries about continuously rising levels of greenhouse gases (GHGs).  It is the first mandatory market-based program in the US to reduce CO2 emissions and includes the first carbon auctions in the United States.

Greenhouse Gases
Figure 2. Historic emissions of CO2 in millions of tons from electric power plants in the northeast region from 1990 to 2009 (in black). The RGGI emissions cap (in red) starts in 2009 and goes to 2019 with a 2.5%/ decline per year from 2016 to 2019 for a net decrease of 10%. However, due to the 2009 recession, switching to cleaner natural gas, increasing energy efficiency, and the RGGI program, current emissions are already 39% below that cap. To be effective, the cap should be revised even lower.

 

In addition to purchasing allowances for power plant CO2 emissions, there are a limited number of CO2 offsets (e.g. efficiency, methane oxidation, etc.) that can be used in the program. Of direct interest to the work of the Woods Hole Research Center are the potential for offsets due to afforestation, reforestation, avoided deforestation, and forest carbon management. The Center’s goal in this effort is to create a decision support system using satellite imagery for RGGI management to develop “what if” scenarios related to land cover change.

In the years since its launch, lessons learned from  the RGGI program include:

                                                                                                                                                                                                                                
The need for political legitimacy   - 10 states signed on, wide support
Importance of a universal auction - Pollution costs money, degrades health
Need to invest auction revenues in efficiency - Also reduces energy demand & costs
Setting the emissions cap level is critical - Current cap, which is too high, was based on data and political considerations.
Need to create a minimum or reserve price - If price goes to zero, there is no incentive to lessen emissions
Need to monitor auctions closely - To prevent manipulation or gaming of the system
Only establish limited offset categories - Too many offsets means the price would stay too low
Integrity of offsets - Offsets must be high quality or not taken seriously
Build on other clean energy policies  - E.g. better building codes, appliance standards, etc.
Continue voluntary efforts - Green energy programs, conservation, etc.
  

Key Points

Cap and trade is generally thought to be a leading approach for limiting emissions as a direct C tax would likely be even less palatable to the public. However, to accomplish this beyond the RGGI region, there is a strong need for US federal leadership as we move toward decarbonizing the economy and establishing energy independence. Public support for policy changes are a key to success.

Because climate change is accelerating, there is a large potential for positive feedbacks to release even more CO2 which will further speed the rate of climate change. To avoid the worst effects, aggressive action is needed to reduce the buildup of CO2 in the atmosphere. Forests can play a key role here both nationally and internationally in slowing and ultimately reversing CO2 buildup by first stopping deforestation in the tropics and elsewhere and then planting new forests to absorb CO2.

Globally, deforestation accounts for about 16% of all GHG emissions. In the US, forests store more carbon than they release due to the regrowth of forests in the Northeast and elsewhere which  offset about 10 to 13% of domestic fossil fuel GHG emissions. In the Northeastern US, the primary threats to forests are residential and commercial development rather than logging. Forests could further mitigate carbon emissions if expanded, thus increasing their carbon density and substituting biomass for fossil fuels or by lessening deforestation and forest degradation.

There are two other regional GHG programs being organized in the US. The largest and most comprehensive is the Western States Climate Initiative (WCI), spearheaded by the state of California. Also being developed is the Midwestern State Greenhouse Gas Reduction Accord (MGGA). The existing US regional programs (RGGI, WCI, MGGA) may serve as models for any federal program.