CO2 Auctions

A report released today highlights the economic benefits of programs funded with carbon dioxide (CO2) allowance auction proceeds through the Regional Greenhouse Gas Initiative (RGGI). The report finds that, overall, RGGI participating states are investing 80 percent of $789.2 million in CO2 allowance proceeds in consumer benefit and strategic energy programs. Energy efficiency programs account for the largest share of RGGI investments. Evaluations of energy efficiency and renewable energy programs in the RGGI participating states show $3-$4 in benefits for every $1 invested.

The report analyzes two years of program investments through 2010 across four categories: energy efficiency, renewable energy, energy bill payment assistance, and additional greenhouse gas emissions reduction programs. The analysis is based on each state’s plan for the investment of CO2 allowance proceeds and on evaluations of strategic energy programs. Key findings include: across the region, states are investing 52 percent of CO2 allowance proceeds in energy efficiency; 11 percent in renewable energy; 14 percent in energy bill payment assistance, and 1 percent in a variety of additional greenhouse gas emissions reduction programs.

State investments create jobs and train the workers needed to fill them. States are investing proceeds as part of a two-pronged strategy to create jobs in clean energy trades and industries, and to train energy auditors, contractors and engineers to fill them. Several graduates of RGGI-funded job training programs have started successful businesses of their own. Investments in energy efficiency are reducing energy costs for consumers and businesses. Many consumers who participate in RGGI-funded weatherization and retrofitting programs realize energy bill savings of 15 to 30 percent. Several businesses have realized energy cost savings great enough to retain or add new employees.

Investments are generating significant economic returns, in the form of energy savings and improved electric system reliability. Several RGGI states are finding that energy efficiency and renewable energy programs provide $3-$4 in savings for every $1 invested. When macroeconomic benefits are considered, the returns are even greater.

The 10 Northeast and Mid-Atlantic states participating in RGGI (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont) have implemented the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. Power sector CO2 emissions are capped at 188 million short tons per year through 2014. The cap will then be reduced by 2.5 percent in each of the four years 2015 through 2018, for a total reduction of 10 percent.

Amey Marrella, Commissioner of the Connecticut Department of Environmental Protection, said: “Our investments in energy efficiency and renewable energy show that utilities, businesses and municipalities working together can achieve significant energy savings while at the same time creating good jobs in Connecticut. In 2010, Connecticut’s energy efficiency programs created direct employment for more than 2,500 people and saved enough electricity to power 442,476 homes for a year. These same programs also helped 1,886 commercial and industrial customers boost their bottom line with $5.8 million in annual energy savings.”

Collin O’Mara, Secretary of the Delaware Department of Natural Resources and Environmental Control, said: “RGGI is helping to improve air quality in Delaware while also helping make our economy more competitive. Delaware’s leveraging of RGGI proceeds into energy efficiency programs in partnership with the Delaware Sustainable Energy Utility has helped numerous households and businesses save money, bolster their bottom line, create local jobs and reduce their environmental footprint.” Strategic energy programs funded with RGGI CO2 auction proceeds represent just one component of states’ efforts to reduce greenhouse gas emissions and build a clean energy economy.