This Week in Clean Economy: Northeast States Bucking Carbon Emissions Trend

America’s greenhouse gas emissions are headed up again, driven by a recovering economy, federal government data show. The Northeast may be able to buck that trend thanks in part to cap-and-trade, the controversial system for curbing global warming gases that Congress and many state governments scorned in recent years.

According to a recent study, cap-and-trade and other measures to combat climate change and stimulate demand for renewable energy helped 10 Northeastern and mid-Atlantic states cut per-capita emissions of carbon dioxide 20 percent faster than the rest of the nation between 2000 and 2009.

“All of these efforts are bearing fruit,” Ken Kimmell, commissioner of the Massachusetts Department of Environmental Protection, told InsideClimate News. “We very much expect that that progress will continue,” as the economy gains strength, he said.

Massachusetts belongs to the Regional Greenhouse Gas Initiative (RGGI), the first and only mandatory cap-and-trade scheme in America. Cap-and-trade creates long-term regulatory certainty for utilities to switch from fossil fuels to clean energy.

“Absent a larger federal cap … I think regional efforts like RGGI will absolutely have the effect” of driving down greenhouse gas emissions, said Ron Binz, a former chairman of the Colorado Public Utility Commission, in an interview.

The April 11 analysis was done by Environment New Jersey, an advocacy group, and was based on data from the Energy Information Administration, the analysis arm of the Department of Energy.

Until recently, New Jersey also belonged to the greenhouse gas initiative. But at the end of December, Republican Gov. Chris Christie ended the state’s participation, saying cap-and-trade was not an effective way to reduce climate-changing emissions. “RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernible or measurable impact up on our environment,” the governor said in explaining his decision to leave the program.

Environment New Jersey’s study was in part intended to counter Christie’s claims and to shore up support for legislation to reinstate New Jersey in RGGI. “RGGI is our only tool to directly control greenhouse gas emissions from power plants,” Matt Elliott, a global warming and clean energy advocate for Environment New Jersey, told InsideClimate News.

“Without RGGI, the question is, how else are we going to [reduce] these emissions? And the answer is we don’t have an answer.”

Environment New Jersey found that CO2 emissions spewed by Northeastern power plants and tailpipes dropped 15 percent between 2000 and 2009, while nationwide emissions fell 7.4 percent during that period. When you look at per-capita numbers, the study said, the region slashed CO2 20 times faster than the nation as a whole.

Energy experts say it is difficult to tease out how much of the decline was from policies to curb emissions, and how much was from the economic downturn and the shift toward cheaper and cleaner-burning natural gas.

“It’s very clear that emissions have decreased in the Northeast. I think it’s largely because of low natural gas prices, plus the effects of RGGI on top of that,” said Bob Teetz, vice president of environmental services at National Grid USA, a Waltham, Mass.-based electric and gas company. The utility operates 4,000 megawatts of natural gas power plants in Long Island, N.Y.

Teetz is currently participating in a three-year review of RGGI on behalf of National Grid. He said he was not familiar with the Environment New Jersey report.

In 2008, 10 states officially launched RGGI—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont.

The states agreed to set a ceiling on carbon dioxide pollution from power plants and to require facilities to pay for their emissions by buying pollution allowances from states in quarterly auctions. Most of the auction proceeds are invested in renewable energy and efficiency programs that help consumers reduce their electricity use.

In addition to supposed environmental benefits, the scheme has generated $1.6 billion in economic activity and created about 16,000 jobs across the region, according to an independent study by Analysis Group, a Boston-based consulting firm.

Environment New Jersey similarly found that despite claims by opponents, RGGI and other measures to curb emissions have not harmed state economies. The region’s gross domestic product (GDP), or the total value of goods and services produced in a year, grew 87 percent faster on a per-capita basis than the national GDP between 2000 and 2009, the study said.

Steve Lonegan, director of the New Jersey chapter of Americans for Prosperity, a nonprofit group that is largely financed by oil industry interests, said in an interview that the Environment New Jersey report was “complete and utter nonsense.” AFP has been campaigning to convince state governments to pull out of the pact.

Lonegan pointed to a March 6 study by the Institute for Energy Research, a group with ties to the oil industry, which said that the methodology and findings of the Analysis Group report were “deeply flawed.”

He also challenged the idea that RGGI had an impact on greenhouse gas reductions, since emissions began falling before the program took effect. Although RGGI is a seven-year-old program, its rules were only enforced during the last 15 months of the report’s nine-year scope.

Not Just RGGI

Environment New Jersey’s study was also intended to rally support for a work-in-progress regional Clean Fuels Standard, which may be on the rocks, and to shine a spotlight on the region’s renewable energy standards.

Every one of the 10 states except for Vermont has adopted a renewable energy standard, which requires utilities to supply a certain amount of electricity from clean sources. Connecticut adopted the region’s first such policy in 1998, with most other states following suit in the early 2000s. New Jersey’s mandate—one of the most aggressive in the country—requires utilities to get at least 22.5 percent of electricity from renewables by 2021.

The study notes that thanks largely to these standards, the Northeast’s wind energy capacity has grown from 25 megawatts in 2000 to nearly 1,700 megawatts in 2010. The Northeast’s solar capacity has jumped from virtually nothing a decade ago to nearly 400 megawatts in 2010. Much of that solar power comes from New Jersey, the nation’s second-largest residential solar market.

Binz, the former utility commission chairman from Colorado, said the value of renewable standards “is enhanced” when carbon pricing policies like RGGI are in place, because compliance makes more economic sense to utilities.

Overall, 39 states across the country have a clean energy requirement. There is no momentum in Congress for a federal mandate.

To reduce tailpipe emissions, all 10 states except for Delaware and New Hampshire participate in the 10-year-old Clean Cars Program, a standard established by California to cut tailpipe pollution by 30 percent by 2016.

Future of Cap and Trade, Emissions

While most RGGI supporters herald the program as a success, many are advocating for a stronger cap on emissions. In 2010, CO2 emissions from the power sector were 30 percent below RGGI’s current cap of 188 million tons, according to data from the Energy Information Administration.

Teetz of National Grid said RGGI states and environmental and utility groups are currently analyzing the potential economic impacts of tightening the cap. If adopted, RGGI could drive even more CO2 reductions, he said.

Meanwhile, California’s cap-and-trade program, the nation’s second, is expected to take effect in 2013. The program was supposed to be regional, but last year Arizona withdrew, while Montana, New Mexico, Oregon, Utah and Washington were dropped for failing to pass laws that would allow them to participate. 

Plans for a nationwide cap-and-trade program were pronounced dead after the last attempt to pass climate legislation failed in 2010, and after the number of conservative Republicans in Congress shot up following mid-term elections.

This week, the Environmental Protection Agency released data showing that the country’s output of greenhouse gas emissions—carbon dioxide, plus methane and four other heat-trapping gases—is rising after a two-year dip during the recession. Emissions from seven economic sectors increased 10.5 between 1990 and 2010, the agency said.

The greenhouse gas inventory does not break down emissions by states or regions, and counts emissions from gases other than CO2, plus non-energy sectors like agriculture and waste, which the Environment New Jersey report does not do.