Northeast Carbon Trading System a Startling Success

RGGI or "Reggie" contributing to faster-than-expected cuts in emissions

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Northeast Carbon Trading System a Startling Success

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:

Northeastern greenhouse gas emissions already are down 30 percent

• 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.

 

 

The Conversation (0)
This photograph shows a car with the words “We Drive Solar” on the door, connected to a charging station. A windmill can be seen in the background.

The Dutch city of Utrecht is embracing vehicle-to-grid technology, an example of which is shown here—an EV connected to a bidirectional charger. The historic Rijn en Zon windmill provides a fitting background for this scene.

We Drive Solar

Hundreds of charging stations for electric vehicles dot Utrecht’s urban landscape in the Netherlands like little electric mushrooms. Unlike those you may have grown accustomed to seeing, many of these stations don’t just charge electric cars—they can also send power from vehicle batteries to the local utility grid for use by homes and businesses.

Debates over the feasibility and value of such vehicle-to-grid technology go back decades. Those arguments are not yet settled. But big automakers like Volkswagen, Nissan, and Hyundai have moved to produce the kinds of cars that can use such bidirectional chargers—alongside similar vehicle-to-home technology, whereby your car can power your house, say, during a blackout, as promoted by Ford with its new F-150 Lightning. Given the rapid uptake of electric vehicles, many people are thinking hard about how to make the best use of all that rolling battery power.

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