Report: Power Plant Emissions in RGGI Region Fall to Lowest Level Yet

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Emissions from power plants located within the states served by the Regional Greenhouse Gas Initiative (RGGI) have fallen to their lowest levels since the CO2 auction program launched in 2009, according to a new report from Environment Northeast (ENE).

Through the first three quarters of 2011, emissions totaled 96,127,957 tons, a 10.7 percent decrease compared to the same period in 2010. Based on average fourth quarter emissions from 2009 and 2010, ENE projects total 2011 emissions will fall to 34 percent below the RGGI regional cap of 188 million tons CO2 emitted. ENE’s analysis is based on emissions data provided by RGGI’s allowance tracking system.

RGGI is a cooperative, market-based cap-and-trade system designed to reduce carbon emissions across the Northeast and Mid-Atlantic U.S. Nine states currently participate in the system (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont). A tenth state, New Jersey, withdrew itself from the program in 2011. It is America’s only functioning cap-and-trade emissions reduction program.

The program applies to all fossil-fuel-burning power plants 25 megawatts (MW) or greater in size. RGGI’s cap has two phases: stabilization at the initial level for 2009-2014, and then a 2.5 percent reduction per year from 2015-2018 for a total 10 percent reduction.

RGGI went into effect on January 1, 2009 and has conducted 14 auctions to date. The most recent auction, in December 2011, sold 27 million allowances at $1.89 each, generating $51.5 million in proceeds. Auction proceeds are returned to participating states, and have totaled $952 million to date. A 2011 report estimated member states have invested 80 percent of auction proceeds into renewables, energy efficiency, and energy assistance programs.

ENE attributes the reduction in emissions to several factors, including power plants switching from fuel oil and coal to natural gas, increased generation from renewable energy sources, a doubling of energy efficiency investments since RGGI began, mild weather, and weak economic conditions in the region.

Emissions have also decreased without significant investment in new generation capacity. Electricity sales have grown across the region, with only modest growth in wind capacity and natural gas additions. The report’s authors suggest that this means emissions can be reduced at a low cost within a market-based program.

According to the report, the consistent trend of these factors through RGGI’s first three years of operation suggests “a long-lasting structural change in the regional electric system that will keep emissions significantly below the existing cap level for the foreseeable future.”

A second regional cap-and-trade auction program is expected to go into effect in 2013 through the Western Climate Initiative (WCI). The WCI, which includes California, British Columbia, Manitoba, Ontario, and Quebec, will hold its first quarterly emissions auction August 15th. California and Quebec recently announced plans to host a joint allowance auction.

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