RGGI Wants Flexibility From EPA

RGGI States Recommend that EPA Support Flexible Market-Based Carbon Pollution Programs States Submit Comments on Proposed Carbon Pollution Rules for Existing Power Plants The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI), the nation’s first market-based regulatory program to reduce greenhouse gas (GHG) pollution, have submitted comments to the United States Environmental Protection Agency (EPA) for consideration as EPA develops guidelines for state programs to reduce carbon dioxide (CO2) emissions from power plants under Clean Air Act section 111(d). Building on their states’ success in cutting carbon dioxide emissions by approximately 40 percent since 2005, the RGGI states encourage EPA to view the RGGI success story as a benchmark for national action. The RGGI states are also recommending that EPA’s new rules empower states to develop market-based GHG emission reduction programs designed to work for their region(s). Regional Model The RGGI states highlight several reasons for why EPA should recognize the RGGI model as an effective system of emission reduction for GHG emissions from the power sector – combining various policy tools with an enforceable cap. It is a proven model. RGGI’s “cap-and-trade, auction-and-invest” model has helped the New England and Mid-Atlantic states make dramatic reductions in GHG emissions. It is extremely cost-effective. RGGI enables compliance through market mechanisms that seek out the least expensive emission reductions across the region. It provides economic benefits. According to an independent analysis, the RGGI states’ investment of auction proceeds from just the first three years of the program (2009-11) is creating thousands of jobs, reducing energy bills by more than $1 billion, and adding a net of $1.6 billion to the economies in the RGGI states. It aligns with the regional nature of the electricity grid and fosters regional cooperation. The nation’s regional electricity grids allow electricity to flow from the cheapest, most efficient producer to meet consumer demand, wherever located. The RGGI cap ensures that emissions decrease across the region, even as it allows increases in some locations in order to reap the benefits of more efficient sources in those locations. It provides a simple, transparent, verifiable compliance system. Under RGGI, the emissions are limited by the allowances that are distributed, providing certainty that the projected emission reductions will be achieved, including reductions attributable to energy efficiency and renewable energy. The RGGI states discuss how their experience demonstrates that regional cooperation can achieve the most cost-effective emission reductions, enable a transition to a lower-emitting and more efficient power sector, and create economic benefits and jobs across the United States. Between 2005 and 2012, CO2 emissions from the power sector in the nine RGGI states dropped more than 40 percent even as the regional economy continued to grow. Preliminary Recommendations  The comments also provide preliminary recommendations for EPA based upon the RGGI states’ experience in implementing a successful market-based power sector carbon pollution program.  The RGGI states recommend that: EPA guidelines achieve meaningful nationwide emissions reductions, and ensure that all states have a common target to reach, even if some states are given more time to reach that target; EPA should provide equitable treatment to states, such as the RGGI states, that have taken action to lower GHG emissions prior to issuance of EPA’s new rule; EPA should provide clear guidelines for a rigorous demonstration of equivalency of state programs; EPA should ensure that state plans are enforceable and that the GHG reductions are verifiable; and EPA should allow states maximum flexibility in reaching a common target by allowing states to: - Use a mass-based system of compliance; - Demonstrate compliance on a regional basis; and - Demonstrate compliance on a multi-year basis.   About the Regional Greenhouse Gas Initiative The Northeast and Mid-Atlantic states participating in the second RGGI control period (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont) have implemented the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. Power sector CO2 emissions are capped at 165 million short tons for 2013. RGGI is composed of individual CO2 budget trading programs in each state, based on each state’s independent legal authority. A CO2 allowance represents a limited authorization to emit one short ton of CO2, as issued by a respective state. A regulated power plant must hold CO2 allowances equal to its emissions to demonstrate compliance for each three-year control period. RGGI’s second control period began on January 1, 2012 and extends through December 31, 2014. For more information visit www.rggi.org