The finalization today of EPA’s Clean Power Plan offers Americans a clear, realistic roadmap for addressing planet-warming emissions that threaten the environment and the U.S. economy.
Most importantly, it puts states in the driver’s seat to devise innovative strategies to reduce emissions efficiently and cost-effectively. Now it's time for states to work together with businesses and cities to craft the approaches that work best for them.
Climate change is a critical challenge, and the impacts will only grow more costly if we fail to act. Last year was the warmest on Earth since we started keeping records over a century ago. During the first half of this year, it got even hotter. Climate change impacts include more extreme heat, which can exacerbate drought and wildfires, more frequent and intense downpours that can lead to destructive floods, and rising sea levels that threaten coastal cities.
New federal standards are already reducing heat-trapping emissions from the second-biggest source, transportation, by increasing the fuel economy of cars and trucks. The Clean Power Plan takes the next logical step by addressing the largest source: the electric power sector, responsible for nearly 40 percent of U.S. carbon dioxide emissions.
As President Barack Obama prepares to deliver his State of the Union address, we believe it’s a good time to take a look at the state of our climate: the growing impacts of climate change, recent progress in reducing U.S. emissions, and further steps we can take to protect the climate and ourselves.
The consequences of rising emissions are serious. The U.S. average temperature has increased by about 1.5°F since 1895 with 80 percent of this increase occurring since 1980, according to the draft National Climate Assessment. Greenhouse gases could raise temperatures 2° to 4°F in most areas of the United States over the next few decades, bringing significant changes to local climates and ecosystems.
After a comprehensive two-year program review, the nine Regional Greenhouse Gas Initiative (RGGI) participating states released an updated Model Rule, planning the program’s first major overhaul since its 2008 initiation.
If adopted by the states, the updated Model Rule would tighten the program’s 2014 CO2 budget, or “cap,” by 45 percent -- from 165 million to 91 million short tons (to match actual emissions from 2012). Actual emissions in RGGI states have fallen well below RGGI’s original cap due to a variety of factors including the low cost of natural gas. The new cap would decline by 2.5 percent each year from 2015 to 2020, aiming to surpass the states’ current goal of reducing CO2 emissions from the power sector 10 percent between 2009 and 2018.
Besides making adjustments to the cap, the updated Model Rule includes provisions to expand its offset program, most notably by adding a forestry protocol. This protocol was modeled after the forestry offset protocol under California’s cap-and-trade program, which emphasizes conservation and reforestation.
Other additions in the updated Model Rule include the creation of a cost containment reserve (CCR) of allowances, denominated by one short ton of CO2 per year. The creation of a CCR would provide a fixed additional supply of allowances, but would only be “triggered” and made available if allowance prices exceed predefined price levels. The CCR provisions would also simplify existing compliance flexibility measures.
Analysis of the updated Model Rule indicates that the proposed changes would result in allowance prices of approximately $4 in 2014 and $10 per allowance by 2020, compared to less than $2 in 2012. The updated program would cause average electricity bills for residents in these states to increase by less than 1 percent, but would generate $2.2 billion for investments in energy efficiency and reduce greenhouse gas emissions from the power sector by about 15 percent from current levels.
The next step is for the updated Model Rule to be formally adopted by RGGI member states through legislative or regulatory processes.
For More Information
C2ES: RGGI Page
C2ES: Benefits of RGGI
RGGI: Updated Model Rule
RGGI: Home Page
California, a leader in efficiency and clean energy policies for decades, is about to embark on another pioneering climate change program.
November 14 marks the first auction in its cap-and-trade system, which uses a market-based mechanism to reduce the greenhouse gas emissions that are warming the planet.
On its own, California’s program will drive down harmful emissions in the ninth largest economy in the world. But perhaps more importantly, California’s example could guide and prod us toward national action against climate change.
Throughout the beginning of 2011, the Regional Greenhouse Gas Initiative (RGGI) —the first mandatory carbon dioxide (CO2) cap-and-trade program in the United States—was successfully defended by state legislators in three states where attempts were made to remove those states from the program. In the second week of May, the states of Delaware and Maine defeated bills proposing withdrawal, while in New Hampshire, Senators did not pass the House’s version of a withdrawal bill. But on May 26, New Jersey Governor Chris Christie announced that his state will leave RGGI by the end of the year.
Participating RGGI states cap CO2 emissions from power plants (those with generation capacities of at least 25 megawatts) and auction most of the emissions allowances. (Each allowance lets a power plant emit one ton of CO2.) RGGI’s CO2 emission allowance auctions raised $789.2 million for the 10 participating Northeast and Mid-Atlantic states from 2008 to the end of 2010. Meanwhile, consumers on average saw their monthly utility bills increase by less than $1. As highlighted in a February RGGI report, this allowance auction revenue has benefited the 10 participating states via investments in clean energy technology and energy bill assistance. These investments are creating clean energy jobs, saving consumers money, and deploying technologies that reduce the environmental impact of power generation.
On July 24, 2008, the Regional Greenhouse Gas Initiative (RGGI) announced the release of auction materials for North America’s first CO2 emission allowance auction. RGGI is a cooperative effort by ten Northeast and Mid-Atlantic states to reduce regional greenhouse gas emissions by power plants through a CO2 cap-and-trade system that will officially start on January 1, 2009. The release of auction materials marked the start of a 60-day countdown to the first auction, which will be held between 9 AM and 12 PM EDT on September 25, 2008. The online auction will place on the market 12,565,387 CO2 emission allowances for purchase by electric utilities.
RGGI Auction Materials
On June 30, 2008, Delware’s Governor Ruth Ann Minner signed into law SB 263, authorizing the state to participate in the Regional Greenhouse Gas Initiative (RGGI). RGGI is a cap-and-trade system being developed by nine other mid-Atlantic and northeastern states. The legislation authorizes the adoption of regulations by the Delaware Department of Natural Resources and Environmental Control for full participation in RGGI when it begins January 1, 2009. In addition, SB 263 outlines how revenue collected from allowance auctions should be distributed, with 65 percent going to the Sustainable Energy Utility, 15 percent to Weatherization Assistance and Low Income Heating Assistance programs, 10 percent to greenhouse gas reduction projects selected through a competitive grant process, and up to 10 percent for administration of climate change programs.
On June 23, 2008, the New York Public Service Commission approved the Energy Efficiency Portfolio Standard (EEPS). The EEPS will reduce electricity consumption 15 percent below projected levels by 2015, equivalent to a 7.5 percent reduction from current levels. In contrast, if existing trends continue unabated, electricity use in 2015 in New York is expected to increase by 11 percent.
The EEPS will stimulate investment in energy efficiency by promoting currently available technologies, such as compact fluorescent light bulbs, solar hot water heaters, and insulating wraps for hot water tanks. It also authorizes incentives to encourage the purchase of energy efficient appliances, such as boilers, furnaces, air conditioners, and clothes washers. In addition, the EEPS will provide weatherization services for low-income households, energy retrofits for small businesses.
Order establishing EEPS
State Energy Efficiency Resource Standards