Cap and trade a success, despite Albany skimming off the top
A new report out from the Regional Greenhouse Gas Initiative (RGGI) declares the compact between nine northeastern and mid-Atlantic states to cap and then trade their carbon emissions a resounding success.
To review, here's how RGGI (pronounced affectionately by those in the know as "Reggie") works. Power companies agree to caps on how much pollution they can make. And to emit that pollution, they have to buy the right, by bidding on "carbon credits" (sold by the ton), at auctions. Companies don't want to pony up the cash, so they're incentivized to cut their emissions. The cash from the auctions gets used on green projects that reduce carbon, and total atmospheric carbon drops. Theoretically.
With the largest initial allowance of carbon dioxide (CO2) emissions of any state in the regional program (covering the northeast and mid-Atlantic), New York is handily raking more than a third of the proceeds, $282 million by the end of 2010.
The state says it has committed more than half those proceeds, some $150 million, to programs designed to reduce energy use at the consumer end, like Green Jobs/Green New York, which helps pay for home energy audits and retrofits.
New York has also used $12 million to install 383 solar photovoltaic systems, with an anticipated combined output of 4,370 megawatt hours per year (for those of you playing at home: that's enough to power 1,000 homes for about half a year). And the program has paid for job training for 6,000 people.
However, as The New York Times reported in November, New York also set the precedent for redirecting funds to other uses:
Gov. David A. Paterson of New York set the precedent last year when he took $90 million from the money generated by the initiative to deal with a projected state budget deficit of nearly $50 billion through March 2013.
The Department of Environmental Conservation's acting commissioner at the time, Peter Iwanowicz told The Times the decision was not made lightly. The new report says that New York allocated 31.8 percent of carbon income to reducing its budget deficit from late 2008 to 2010.
The RGGI report says New York, New Jersey and New Hampshire were the only states to put money toward state budget deficits. That included 44 percent for New Jersey's revenues from the program. Overall, the states in the partnership report investing 80 percent of proceeds from the sale of CO2 emission on energy programs.
The National Resource Defense Council (NRDC) has declared victory in a blog post today, suggesting the success of investments demonstrate that more money should be devoted to green initiatives, and that the RGGI model holds promise for other states.
Dale Bryk, NRDC's Director of the Air & Energy Program in New York writes:
What if there were a mechanism that could help you save money, cut back on pollution, and create jobs all at the same time? Would you jump at the chance to use it? I would.
Bryk goes on to argue that RGGI's budget-gap-killing capacity means the program should be defended against conservative groups who say the program is essentially a hidden tax on energy consumption.