The Regional Greenhouse Gas Initiative (RGGI) cap-and-trade system’s contributions to decarbonization are well-known: hundreds of millions in clean energy investments and lower emissions.
But a new report from the American Council on Renewable Energy (ACORE) details the extent RGGI has helped drive new renewable energy capacity additions, and hints at the potential for the Environmental Protection Agency’s (EPA) Clean Power Plan rule.
Renewable Energy in the 50 States: Northeast Region reports the Northeast U.S. added 800 megawatts (MW) of new renewable energy capacity in 2013 – a model that could be emulated across America if other state governments opt for cap-and-trade carbon markets to fulfill EPA’s emissions reductions goals.
800 MW New Renewables For Northeast U.S. in 2013
The Northeast U.S. is a region ripe for economic growth through power system decarbonization. A combination of high electricity prices, large cities with high power demand, an older fleet of fossil fuel generation, and difficulty building new transmission lines have led policymakers to develop and maintain pro-renewable energy policies, and they’ve worked well.
New solar photovoltaic (PV) installations dominated the 800 MW new installed capacity, and nearly $1 billion in new clean energy finance flowed into the region in 2013, pushing it to second overall nationally in cumulative solar power capacity. Massachusetts’ solar market surged 76% to place fourth in America for new capacity, while New Jersey ranked fifth and New York State ranked ninth overall on the strength of a $1 billion solar commitment from the New York Green Bank though 2023.
Wind energy hasn’t matched solar’s growth so far, due to a lack of open space required for utility-scale wind farms, but ACORE predicts the rush of offshore wind projects in development at sites along the Atlantic coast could lead to America’s first offshore wind farms and thus, a big boost in installed wind capacity.
“To meet 21st century energy needs, Northeastern states need to assess and utilize all their renewable resource options…especially as technologies are becoming more cost-effective and widely adopted,” said Lesley Hunter, lead author of the report.
In addition, the Northeast U.S. states have led the fight against rolling back renewable energy goals, most notably Vermont quadrupling its net metering cap earlier this year and Connecticut repealing its moratorium on large wind energy projects.
Cap And Trade Pumps Pollution Revenue Into Clean Energy
At this point, you’re probably asking how RGGI fits into the equation, but that’s a simple answer: By setting a realistic cap on carbon emissions from large-scale emitters (read, fossil fuel power plants) and charging a reasonable price on emissions beyond that cap, RGGI’s cap-and-trade system creates regulatory certainty for businesses while dedicating funds to each member states to invest in clean energy, without slowing economic growth.
Make no mistake, clean energy has room to grow in the Northeast, but the resulting outcomes are hard to ignore – carbon emissions have fallen across the RGGI states 29% since the system began operation in 2009, while $700 million in RGGI auction revenues have been invested in renewables and energy efficiency. In fact, a 2013 forecast estimated RGGI revenue could hit $2 billion by 2020.
ACORE also notes RGGI’s positive effects on regional grid operators, allowing them to incorporate large amounts of renewables while lowering power costs and boosting system reliability. America’s largest grid operator PJM Interconnection could hit 30% renewables by 2026, and is on its way to doubling wind power capacity while saving nearly $7 million per year in the mid-2020s. ACORE also notes ISO New England expects distributed generation to quadruple from 250 MW in 2012 to 2 gigawatts (GW) by 2021.
Chump Change Compared To What’s To Come?
But the best may be yet to come for RGGI and clean energy. The system adjusted its carbon permit allocations to accommodate the changing energy market created by America’s shale gas boom, and permit prices have reacted positively. Auction clearing prices have risen from $3 per ton in December 2013 to $4 per ton in March 2014 and $5.02 per ton in June 2014 – with each auction selling out all available allowances.
That means carbon allowance demand is staying constant, while dedicated revenue for clean energy projects continues increasing and emissions continue declining – a win-win-win for all involved, and a success story to consider when fossil fuel advocates say EPA’s emissions proposal will harm America’s economy.
“RGGI has facilitated significant reductions in carbon dioxide and other emissions in participating states since it launched, while electricity prices declined,” said Michael Brower, ACORE President and CEO. “The success of RGGI heralds the promise of positive results from EPA’s new proposed Clean Power Plan rule.”