Cutting Carbon Provides Economic Benefits to RGGI States

Kasey Krifka, The Climate Trust
Weekly Policy and Finance Update – May 21, 2018

THE BOTTOM LINE.

While the Regional Greenhouse Gas Initiative (RGGI)—the nation’s first mandatory carbon-trading program—wasn’t initially designed to boost economic development, a new report from the Analysis Group demonstrates that this has been an important outcome.

Researchers have tracked RGGI since its inception in 2009, and the data from each review period consistently shows that cutting carbon emissions is providing financial benefits (at least $4 billion over the program’s nine years) that clearly exceed the costs in the program’s nine-state region. The recent 3-year review (2015-2017) found $1.4 billion in economic benefits, massive job creation, and low program risks. Overall, RGGI states have added 44,000 new job-years since 2009 (the equivalent of a full-time job for one year) even as the emissions cap was lowered and pollution allowance costs rose. Many of the new jobs are sustainability sector focused, including energy auditors and installers of energy efficiency equipment.

“RGGI’s nine years of experience supports a conclusion that market-based CO2 emissions-control programs can produce positive economic impacts and meet emissions objectives while dovetailing smoothly into the normal operation of power systems,” the Analysis Group wrote.

The report also found climate-related benefits, such as reducing health costs and damages related to climate change, as well as a savings of $1.37 billion over three years from a reduction in fossil fuel purchases from out-of-state suppliers.

While climate change has become a partisan issue with policy makers, made evident by the federal government’s stated intention to walk away from the Clean Power Plan, under-the-radar programs like RGGI have been able to demonstrate a clear economic case for their existence, even apart from the environmental benefits, which are vast.

As other states consider their own carbon pricing programs, we are encouraged that two states plan to join RGGI in the near-term, Virginia and New Jersey (a former RGGI member, now under new Democratic leadership). This bodes well for those who care about the well being of our people and our planet.

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Image credit: Flickr/Mark Jensen