California Leads Off: Now RGGI Must Grab the Climate Baton

July 19, 2017/ Jackson Morris / Air Quality, Climate, Conservation, Natural Resources Defense Fund, North America, Resources

Published by the Natural Resources Defense Fund

California just set a new bar for what U.S. climate leadership looks like. With passage of a legislative package to extend the state’s market-based cap-and-trade program, state legislators have helped ensure that California—the world’s sixth-largest economy—will cut carbon pollution by 40 percent by 2030, all while cutting dangerous local air pollution, too. (Forty percent by 2030 is the amount of greenhouse gas pollution scientists say we must cut to avoid climate change’s worst effects.)

Now that California has enacted legislation to cut climate pollution by 40 percent by 2030, it’s up to the RGGI governors to reach out and grab the climate baton from those leaders and make ambitious cuts to power plant pollution between 2021 and 2030.

Sanya Richards for Comision Nacional de Cultura y Deporte, via Flickr

The question now is whether, in the dangerous absence of sound climate policy from the Trump administration, governors of the nation’s other state climate leadership effort, the nine Northeastern and Mid-Atlantic states that comprise the Regional Greenhouse Gas Initiative (RGGI), will grab the baton from the Golden State. Will the RGGI states make more ambitious cuts in the region’s cap on power-plant carbon pollution, as part of a soon-to-be-completed RGGI program review? (The states have committed to a “late summer” decision, but that decision point may now be coming even sooner.) Or will Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont drop the baton and leave their states and the nation farther behind in the race to stop climate change and to grow the many benefits that come along with the clean energy economy? Here, we are talking about tens of thousands of new jobs, billions of dollars in energy savings, and public health gains valued, again, in the billions.

Will RGGI’s governors live up to their state climate policies, which require economy-wide cuts in climate pollution of at least 40 percent by 2030 and 80 percent by 2050? And will the six governors from Connecticut, Delaware, Massachusetts, New York, Rhode Island, and Vermont, who have joined the United States Climate Alliance—a group of 13 states (to date) and Puerto Rico committed to achieving the goals of the Paris Climate Accord—meet those commitments and break the tape at the finish line, or will they falter and end up down on the track?

The RGGI region, by the way, has a collective economy larger than California’s, and with two additional states—New Jersey and Virginia—likely to join RGGI’s carbon market in the years ahead, the group is poised to expand. Accordingly, the decisions the nine current governors make now about the future of RGGI are of incredible consequence, not only for the climate but also for state economies and public health.

These questions are particularly pressing now because the RGGI states are in the final leg of a review that they’ve undertaken over the last 20 months to determine the next phase of their wildly successful program, from 2021 to 2030. They’ve modeled scenarios of possible reductions in RGGI’s cap on carbon pollution from power plants, which limits pollution in the region. One scenario only continues the status quo—a 2.5 percent reduction in emissions annually. But other scenarios are more ambitious—up to a 3.5 percent reduction per year—and can drive an additional 99 million short tons of carbon pollution reductions by 2030, the equivalent of avoiding one-year’s worth of emissions from 19 million cars.

We need these more ambitious reduction levels to achieve, cost effectively and on-time, our 2030 and our longer-term climate goals. When RGGI leads, the region benefits. Indeed, we’ve seen this play out since the program began in 2009. Despite critics’ promises that RGGI would send electric prices soaring, tank the regional economy, and bring negligible emissions reductions, just the opposite has happened:

Carbon pollution from power plants (but not from the region’s economy as a whole) is already down 40 percent, outpacing other parts of the country.
The cost of electricity is down, too, by 3.4 percent, while electricity prices in other areas rose.
RGGI state economies have grown by 25 percent, again outpacing growth elsewhere.
Public health benefits from RGGI are valued at a whopping $5.7 billion. (Cutting carbon pollution from power plants cuts other illness-causing power plant pollution, too.)
Energy efficiency measures and renewable energy installations funded by state RGGI programs—the revenue is raised at quarterly carbon-allowance auctions—have saved consumers $618 million on their energy bills to date, with billions more expected over these measures’ lifetimes.
RGGI has boosted regional employment by more than 30,000 job-years. (A job-year is just like it sounds: one year of full-time employment for one person.)

The possibilities under more ambitious future cap scenarios are impressive as well. Modeling from the RGGI states shows that tighter carbon caps would have minimal effects on power prices (less than one-tenth of a penny per kilowatt-hour in 2017 and two-tenths of a penny in 2031), even before accounting for any of RGGI’s benefits, including continued health savings and investments in energy efficiency and renewable energy that will lead to further job growth and consumer energy bill savings. For example, the experts at Synapse Energy Economics found that cutting carbon pollution by 5 percent per year in the current RGGI region—even more ambitious than what the states recently modeled—would help save consumers $25.7 billion on their energy bills and support 58,400 jobs a year.

The question, as we’ve said, is whether the RGGI states intend to fulfill their promises and obligations as part of the U.S. Climate Alliance and under their own climate policies and laws. The states can do so by adopting a stronger RGGI program—one that goes beyond a status quo, 2.5 percent cap reduction per year and commits the region to a truly ambitious path forward. That more ambitious approach should include: (1) a cap correction in 2019 that reflects the progress the RGGI region has already made; (2) future cap reductions of at least 3.5 percent per year through 2030; (3) a full adjustment to RGGI’s cap to account for the bank of excess allowances in the region; (4) a higher price floor to provide market certainty and ensure a minimum carbon value; (5) a new Emissions Containment Reserve to capture future low-cost emission reduction opportunities; and (6) a significantly reformed Cost Containment Reserve. (For more on these specifics, see our prior blog post here.)

Thanks to historic legislation enacted this week, California has offered the RGGI governors the climate baton. It’s up to these governors now to reach out, grab it, and continue to push the pace.