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U.S. Northeast carbon market creating jobs, revenue: study

Study claims region's carbon tax is slashing greenhouse gases, creating jobs and reducing electric rates

By MICHOLA GROOM
Reuters

April 17. 2018 11:07AM
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Nine states in the Northeast have slashed greenhouse gas pollution, created thousands of jobs in clean energy, and cut consumer power costs using a market-based scheme to slash carbon emissions, according to a study released on Tuesday.

The report on the Regional Greenhouse Gas Initiative from Boston-based consultancy Analysis Group comes as the Trump administration seeks to unwind federal efforts to fight climate change, arguing they would kill jobs and stifle growth.

The RGGI - a cap-and-trade scheme adopted in 2009 - has provided its nine members $1.4 billion in net economic benefits since 2015, according to the study. It has generated more than 14,500 job-years in the renewable energy and efficiency sectors. A job-year is the equivalent of a full-time job for a year.

Those benefits come in addition to a more than 50 percent cut in emissions of carbon dioxide in the region since the RGGI’s inception - a trend aided by the retirement of aging fossil-fuel power plants, cheap natural gas, and sluggish demand in the wake of the 2008 financial crisis.

“All of the states have benefited from an actual reduction in carbon emissions,” Sue Tierney, a senior adviser with Analysis Group, said in an interview last week. “From a monetary and economic point of view ... consumers are a bit better off.”

A report by the Congressional Research Service last year, however, said the RGGI program’s direct impact on reducing global greenhouse gas emissions was “arguably negligible,” in part because the region overall is responsible for just 7 percent of total U.S. greenhouse gas emissions.

The RGGI system, which was meant as a model for other states and countries to join or replicate, seeks to encourage carbon cuts by requiring industries like power plants to acquire tradable permits to cover their emissions. Each year, fewer permits are made available by the states - creating an incentive for businesses to reduce carbon output.

The revenue from the permit sales has amounted to some $2.8 billion since 2009. The revenue goes to the member states, which then invest in programs that support energy efficiency, renewable energy and jobs training, according to the report.

Analysis Group said the permit costs had led some fossil fuel generators most affected to hike power prices, but that the states’ investments in energy efficiency and renewables had more than compensated for that by reducing consumer demand, resulting in an overall decline in costs for electricity.

Wholesale power prices in New England averaged roughly $33 per megawatt hour in 2017, among the highest in the country, but still less than half the level in 2008 before RGGI was adopted, according to data from grid operator ISO New England.

The RGGI states include Connecticut, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New York, Rhode Island and Vermont. New Jersey, an original member, is seeking to rejoin after withdrawing in 2011.

The Analysis Group’s report was funded mainly by progressive and environmentalist foundations including the Barr Foundation, the Energy Foundation and the Merck Family Fund.

Reporting by Nichola Groom in Los Angeles; Editing by Matthew Lewis


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