MarylandReporter.com has an interesting piece about a disagreement in the Maryland General Assembly over allocating funds from the Regional Greenhouse Gas Initiative (RGGI). RGGI is a regional cap and trade agreement between ten Mid-Atlantic states where emission allowances are auctioned to power producers. The states then use the auction proceeds for energy efficiency programs. Power companies pass on the cost of purchasing allowances to ratepayers. Governor O’Malley committed Maryland to the pact in 2007.
Maryland splits it’s RGGI revenues into several different allocations. The House and Senate disagree over directing more RGGI revenue in the state budget toward ratepayer assistance or home energy efficiency. The story quotes Tom Landers from the advocacy group Environment Maryland saying that the energy efficiency programs will lower energy costs in the long run and create jobs.
Those dubious claims aside, RGGI is an unnecessary energy tax. While RGGI doesn’t necessarily cause an increase in utility rates, RGGI’s emission cap is set so high that power producers won’t come close to emitting more GHGs than allowed. So called “polluters” have no incentive reduce their emissions, therefore rendering the ostensible point of the pact moot. For example, even though BGE customers only see $1.50 RGGI charge on their bills, it’s still an unnecessary charge to customers for no measurable effect on climate. Even though the price for RGGI allowances has stabilized they have slid well below the point of achieving their ostensible purpose. This chart explains it.
Furthermore, as one RGGI insider noted reducing emissions isn’t the primary goal of the pact:
I do not think RGGI cap was set to reduce emissions because that wasn’t the primary purpose of RGGI. At the start of the RGGI process there was a tacit understanding amongst the participants that the real goal of RGGI was to develop the framework for a CO2 cap and trade program that could be used as a model for a national program. After all, the unstated reality is that it could never hope to actually have any impact on global warming.
The push for energy efficiency has not reached the goal of lowering energy costs and creating jobs.
Efficiency and conservation schemes sound great but they are a siren’s song, which in reality lead to paying more to use less energy. California—O’Malley’s lodestar on energy policy—ranked in the top 10 for states, which increased their Co2 emissions in 2007. Even with all its vaunted demand side management and efficiency programs, demand in the Golden State spiked and emissions increased.
Nor has the bonanza of “green jobs” materialized. The Department of Energy advertised with much fanfare that it’s $5 billion energy efficiency program—a component of President Obama’s trillion dollar stimulus package—would create 87,000 new jobs. However, the Associated Press reports only 8,500 jobs have been created so far. Using the Obama administration’s own jobs “saved or created” calculus that comes out to a $588,235.30 per job cost to the taxpayer, for what are in essence temporary positions.
RGGI and it’s efficiency schemes are wasteful and ineffective. If Governor O’Malley won’t withdraw Maryland from the pact, then the General Assembly should return the proceeds to ratepayers, who pay for this government boondoggle.
Comments
You know, I'll stop driving my SUV that produces some 16 tons of CO2 every year and drive a motorcycle every day to work. This should reduce my CO2 emissions by some 2 Ton's or more per year. I'll then sell my carbon offset to the government for $1,000 per ton of CO2 I saved. Think that will work? Genious, pure genius. Cap and Trade = suckers and losers.
I agree with you completely on the RGGI cap not being effective and the funding producing little or no apparent benefit. But I disagree that energy efficiency programs don't make sense. There are many, many examples where buying a more efficient piece of equipment will generate many times the up-front cost in energy savings. A $10 low flow showerhead for a home, for example, that reduces hot water consumption will easily recoup the $10 investment in reduced water heating costs. Lighting upgrades in retail stores and industrial facilities (that have long operating hours) can reduce the energy consumption used for lighting by 50% or more, easily paying for the cost of the fixtures in 2 years or less, and then producing an annual savings after this payback period. There is nothing dubious about this - the facts are well documented.
I am a fiscal conservative that has a hard time understanding how many other conservatives don't see the value in conservation.
Jeff,
Only that demand side conservation programs don't protect you from rate increases.
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