It seems like a real reason to celebrate: Greenhouse gas emissions from Northeast power plants are 36 percent below a cap set in a landmark climate change pact.
But the steep reductions, driven primarily by the region’s growing dependence on natural gas, are having the perverse effect of undermining the Regional Greenhouse Gas Initiative because there are fewer financial incentives for polluting power companies to invest in cleaner technologies.
Today, a broad coalition of more than 300 Northeast businesses, academics, and environmental and health groups sent a letter to the nine states involved in the pact, known as RGGI, to reset the cap to reach 20 percent below today’s emissions within eight years. Officials from the states are involved in a three-year review of the program.
“With emissions down, the Governors have an opportunity to build on RGGI’s success,” said Peter Shattuck, director of market initiatives for ENE (Environment Northeast) a research and advocacy group. “Governors need to strengthen this proven, effective system to continue reducing pollution and driving the transition to a clean, modern energy system.”
While some states, such as Massachusetts, are expected to embrace some sort of reset button, others are not, and a battle is expected over what the correct cap should be. Some industry officials were quick to attack the idea.
“If the goal of RGGI was to reduce the levels of carbon dioxide, we say mission accomplished,’’ said Bob Rio, senior vice president of Associated Industries of Massachusetts, a trade group. “We should be celebrating, not looking for ways to make it more bureaucratic and to raise prices unnecessarily.”
RGGI is the first mandatory market-based carbon dioxide reduction program in the United States.
Massachusetts and nine other states spent years coming up with a plan to cap large power plants’ emissions in 2009 and gradually reduce them by 10 percent over the next decade. New Jersey has since pulled out, although a lawsuit is challenging that move.
The program is designed to have power plants buy emission allowances from states for every ton of carbon dioxide they emit, with plants that emit larger amounts having to buy more allowances than cleaner ones. The number of available allowances is designed to decrease as the overall cap is lowered, raising their price, and ideally, encouraging plants to invest in clean technologies to avoid the higher cost of polluting.
But if emissions are significantly lower than the cap, there would be less demand for allowances, driving down their price and giving power plants little financial incentive to invest in cleaner and more efficient technologies.
And that is exactly what has happened. According to an analysis by Environment Northeast, low emissions are mostly coming from switches to less expensive natural gas, as well as from use of more renewable energy and stable electricity consumption – and to a lesser degree from mild weather and the weak economy. While RGGI has produced enormous benefit -- more than $1 billion from selling pollution credits that largely has gone back into paying for energy efficiency and other green programs -- far more can be accomplished, the groups say.
The states do not have a deadline for deciding on a new cap -- or whether to change it. However, a top Massachusetts official said improvements are needed.
“Massachusetts does believe the cap needs to be lowered,’’ said Kenneth L. Kimmell, commissioner of the Massachusetts Department of Environmental Protection. “But whether that is 20 percent below today” isn’t known. He said more modeling and analysis is needed before a decision can be made.