Gov. Phil Scott agreed this week to a carbon-pollution-pricing scheme that will impose dramatic cuts to the amount of carbon dioxide Northeast states produce through electricity generation.
The agreement commits to a 30 percent reduction in carbon dioxide emissions from electricity power plants between 2021 and 2030.
The move accelerates restrictions on pollution set by the country’s first market-based carbon pricing program, called the Regional Greenhouse Gas Initiative, or RGGI.
David Farnsworth, a former Public Service Board staff attorney who represented Vermont during the earliest stages of RGGI’s formation in 2003 and 2004, said the program is modest but important — in part because it shows that carbon pricing is viable.
“This has always been a really modest program, but it’s demonstrating a concept,” Farnsworth said. “The RGGI states have been really intelligent about this.
“Often, at the beginning of environmental programs, you hear Chicken Little, ‘The sky is falling,’ kind of critiques,” he continued. “The critiques were that it was going to destroy the economy in the Northeast. It hasn’t. Actually, it’s been really beneficial.”
The program began with five Republican governors and five Democratic governors, Farnsworth said. Recent events at the national level haven’t eroded that political comity, he said.
“Now, the political climate in the U.S. has been very negative about carbon management — there’s no Clean Power Plan, we walked away from the Paris Accords,” Farnsworth said. “You wonder if that decision-making is going to filter down to the RGGI states.”
This most recent agreement — which extends the terms of RGGI another 10 years while constricting still further the Northeast’s carbon-dioxide pollution — shows that the program has staying power, he said.
The tightened RGGI carbon-emission limits are expected to reduce pollution in the Northeast, and bring more money to state coffers. Vermont has received almost $20.5 million from the program since its inception in 2009. How much it will bring in next year or in subsequent years will depend on how the market responds.
“It’s a little bit early to say exactly how it will look, because RGGI is a market, and the amount (Vermont receives) is always determined by how the market behaves,” said Mary Sprayregen, the director of strategy, policy and public affairs at Vermont Energy Investment Corp. Sprayregen said Vermont could see revenue from the program increase as emissions trades become more rare.
Most of the $20.5 million Vermont has received from RGGI has gone to a state program called Efficiency Vermont, which is overseen by the Public Utilities Commission and administered by VEIC.
Efficiency Vermont has invested the proceeds into efficiency measures that aren’t offered through other programs, Sprayregen said. For instance, weatherization assistance is available through other programs for low-income individuals, but not for multi-family housing such as apartment buildings.
Investments in energy efficiency save about double the cost of the investment, according to a 2016 report.
Scott is one of nine governors to agree to the new pollution limits established through RGGI, which is a compact between Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.
Vermont invests its proceeds from RGGI in energy efficiency programs that are reviewed and approved by the Public Utilities Commission (known until June as the Public Service Board).
RGGI is scheduled to ratchet down emissions caps imposed on all nine states’ electric generators by 2.5 percent each year until 2020; the agreement Scott made this week commits the states to what is effectively more than a 3 percent annual decrease for the next 10 years after that.
The cap in 2015 was 91 million tons. Electric utilities in the nine participating states may emit no more than that amount of carbon dioxide over the course of the year.
Utilities, investors and others must purchase rights to emit certain portions of that total, called apportionments. Utilities must own apportionments for every ton of carbon-dioxide emissions they produce, and they purchase apportionments quarterly through a RGGI auction.