The Regional Greenhouse Gas Initiative (RGGI) will yield an economic gain of $1.6 billion, create 16,000 jobs and save consumers across its ten participating member states some $1.1 billion in electricity, heating and cooling bills over the next ten years as a result of its first three years in operation, according to a report from the Analysis Group.
A greenhouse gas emissions (GHG) cap-and-trade system, RGGI is designed to throttle down regional GHG emissions by capping carbon dioxide (CO2) emissions and mandating that electric power plants buy emissions permits at auctions to release decreasing amounts of the greenhouse gas over time.
Launched in September 2008, it was the first market-based regulatory program of its kind in the US. As participating members, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont have set a target of reducing combined CO2 emissions from electric power plants 10 percent by 2018.
Proceeds from CO2 emissions permit auctions are, in the main, used to promote energy conservation and renewable energy, though three states have used some of the resulting revenue to balance their overall budgets.
Analysis Group’s research team employed a “‘follow the money’ approach and well-established modeling tools and methods” in carrying out the study. They “tracked the path of RGGI-related dollars as they leave the pockets of generators who buy CO2 allowances, show up in electricity prices and customer bills, make their way into state expenditure accounts, and then roll out into the economy,” according to a media release.
“By carefully examining the states’ implementation of RGGI to date, based on real data, we hope to provide a solid foundation for observations that can be used by others in future program design and to inform deliberations about RGGI going forward,” the Analysis Group research team stated.
* The regional economy gains more than $1.6 billion in economic value added (reflecting the difference between total revenues in the overall economy, less the cost to produce goods and services)
* Customers save nearly $1.1 billion on electricity bills, and an additional $174 million on natural gas and heating oil bills, for a total of $1.3 billion in savings over the next decade through installation of energy efficiency measures using funding from RGGI auction proceeds to date
* 16,000 jobs are created region wide
* Reduced demand for fossil fuels keeps more than $765 million in the local economy
* Power plant owners experience $1.6 billion in lower revenue over time, although they overall had higher revenues than costs as a result of RGGI during the 2009-2011 period
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Image source: Analysis Group