Criticism of cap-and-trade programs often centers on the costs they impose on electric power companies and their consumers. But as I report in Friday’s Times, New York and other Northeastern and mid-Atlantic states that are trying out such a system have found that those costs can be offset by energy efficiency measures paid for by the cap-and-trade program itself.
A study by the Boston consulting firm Analysis Group that was commissioned by four nonprofit foundations last year noted that states participating in the program had received $912 million over three years by charging electricity providers for their carbon dioxide emissions. Many of the states invested most of those funds in programs to retrofit homes and buildings to make them more energy-efficient, lowering consumption of electricity.
So while the program led to a slight rise in electricity rates – less than 1 percent — consumers in those states ended up seeing lower bills over all as their demand declined.
“All told,” the study said,” electricity consumers over all – households, businesses, government users and others – enjoy a net gain of nearly
$1.1 billion as their overall electric bills drop over time. This reflects average savings of $25 for residential consumers, $181 for commercial consumers and $2,493 for industrial consumers over the study period.”
The nine states in the program, known as the Regional Greenhouse Gas Initiative, or RGGI (pronounced “reggie”), are now in the process of reviewing the first three years of the program with the goal of strengthening it. Ten states were involved before New Jersey pulled out last year.
“The overall legacy is going to be lower energy costs, lower emissions and more competitiveness and economic development,” said Collin O’Mara, chairman of RGGI’s board of directors and secretary of the natural resources and environmental control department for Delaware, one of the participating states.
Kenneth Kimmell, commissioner of the Department of Environmental Protection in Massachusetts, which invested 94 percent of the program’s proceeds in energy efficiency measures, said, “We certainly feel like RGGI has been a tremendous success.”