The New York Times carried a small story on an inside page this week that takes stock of the Regional Greenhouse Gas Initiative (RGGI, or "Reggie") that ten northeastern states launched in January 2009, with quarterly auctions of emissions allowances. The story, drawing on a number of independent reports, finds that emissions reductions have been greater and cheaper than expected, and have produced substantial fringe benefits in terms of lower overall electricity costs, more jobs, and greater regional independence of fossil fuel imports.
The inspiration for RGGI and cap-and-trade carbon trading systems generally was the trading system the United States invented to reduce emissions of acid rain precursor aerosols, which in the 1980s and 1990s yielded bigger and cheaper cuts in SO2 and NOx emissions than the system's most enthusiastic proponents had predicted. The general objectives of RGGI have been to first stabilize emissions at 2002-04 levels and then reduce them 10 percent by 2018.
Among the findings about RGGI, as reported in the Times:
• Although switching from coal to abundant and inexpensive natural gas, along with economic recession, largely account for that startling decline, the RGGI trading system accounts for 6 percentage points of the cut in greenhouse gas emissions
• An independent assessment by the Analysis Group found that RGGI has saved customers money and created jobs, as participating states have used proceeds from the auctions to promote energy efficiency and electricity generation from renewables
• Because of lower demand for allowances with the much greater than expected declines in emissions, participating states are retiring more than 90 percent of unsold credits, so as to prop up the prices of future allowances and encourage further carbon cuts
(In May last year, New Jersey Governor Chris Christie took the state out of RGGI, the whole notion of climate change having become a dirty word in Republican politics. But it's worth noting that party leaders like John McCain and Newt Gingrich had once strongly promoted cap-and-trade.)
Why indeed--it's perfectly fair to ask--bother to cut just one region's emissions when in much of the rest of the world emissions are soaring? Greenhouse gases mix freely in the atmosphere, after all, so that any one region is affected by all the world's emissions, not just its own.
The short answer is that initiatives like RGGI demonstrate the principle of emissions trading and develop the mechanics of a successful system. This Reggie seems to have accomplished already with spectacular success.