small steps for ePa, giant step for Rggi
While Obama’s EPA edges toward regulation of carbon emissions,
the first regional program proves that cap and trade works.
by rOBEr T uKEILEY
Robert ukeiley (rukeiley
@ igc.org) is a lawyer
who represents environmental nonprofits in
Clean air act litigation
affecting energy issues.
The Obama administration’s Environmental Protec- tion Agency (EPA) took another small, slow step in its amble toward regulation to address the climate
crisis. In August, the EPA issued an order objecting to an
air pollution permit for a new coal-fired power plant owned
by E.ON ( eon-us.com) in Kentucky. In the order, the EPA
objected not to the lack of emission limits for carbon dioxide and other greenhouse gases, but on other grounds.
However, the EPA did say that when they set greenhouse gas emission limits for cars and trucks, those limits
will trigger the Clean Air Act requirements for stationary
sources, too. Those stationary sources will include power
plants and refineries. While this is the slowest, least protective position that the EPA could take without blatantly
defying the Clean Air Act, it is a step forward. By the time
you read this, the EPA should have published its proposed
regulations for greenhouse gas emissions by cars and
trucks. Once they’re out for public review and comment,
we need to pressure the EPA to finalize this regulation as
quickly as possible.
On another front, the first greenhouse cap-and-trade
program, the Regional Greenhouse Gas Initiative (“RGGI,”
pronounced “Reggie”), is running along nicely. Participating states are Connecticut, Delaware, Maine, Maryland,
Massachusetts, New Jersey, New Hampshire, New York,
Rhode Island and Vermont. Cap and trade means the
government sets a total number of tons of a pollutant
that can be emitted. The government then issues credits,
allows entities to buy and sell the credits, and requires
that polluters have credits equal to the amount of their
The great thing about RGGI is, when the government
issues the credits, it doesn’t give them away. Rather, it auctions off the credits to the highest bidder and then uses the
revenue to support renewable energy (RE) and energy efficiency (EE). RGGI’s June auction of credits raised $104.2
million for investment in the clean energy economy in the
10 participating states. Each credit gives the owner the right
to emit 1 ton (0.9 metric ton) of carbon dioxide. Credits
that can be used anytime sold for $3.23 a piece, and credits
that can be used after 2012 sold for $2.06.
What does this mean for RE and EE supporters? Coal-fired power plants emit about 1 ton of carbon dioxide per
megawatt-hour (M Wh) of electricity produced, and natural
gas-fired power plants emit about half that. Thus, roughly
speaking, RE/EE has about a $3.23 per megawatt-hour cost
advantage when competing against coal-fired generation
and about a $1.62 per megawatt-hour cost advantage when
competing against natural gas-fired generation.
RGGI presents a great opportunity to demonstrate the
falsity of claims regarding the high cost of climate action.
Under RGGI, power-sector carbon dioxide emissions are
capped at current levels through 2014. The cap will then be
reduced by 2. 5 percent each year from 2015 through 2018,
for a total reduction of 10 percent.
RGGI has not yet set the cap for 2019 and 2020. RGGI
should set the cap at 10 percent below 1990 emission levels for 2019 and 20 percent below 1990 emission levels
for 2020. These are the sort of reductions scientists working with the Intergovernmental Panel on Climate Change
and others say we need. If RGGI sets this cap and quickly
holds an auction, we would have a much better picture of
the true cost of getting the needed greenhouse gas emissions reductions.