New Jersey and Virginia Prepare to Join Regional Greenhouse Gas Initative to Reduce Carbon Emissions

I’d like to break into the our regularly scheduled doom and gloom, to note a small but important piece of good environmental policy news that last month has poked green shoots up through the policy wasteland of the last 10 months.

The Regional Greenhouse Gas Initiative (RGGI) is about to get two new members.

RGGI is a consortium of nine New England and Mid-Atlantic states formed to reduce carbon emissions from large power plants through a cap-and-trade system. The program, which applies to power plants with a capacity of larger than 25 megawatts, establishes a region-wide cap on carbon emissions.  Emitters bid in a competitive auction to purchase a permit to emit 1 ton of CO2. They trade in permits when they pollute, or can save unused permits for future use, or sell them to other bidders. States invest the proceeds in energy efficiency or clean energy programs.

The annual cap, which was set originally at 165 megatons of CO2 equivalent in 2008, and adjusted to 91 megatons in 2014, declines by 2.5 percent each year through 2020. The stakeholders are currently negotiating an extension of the program through 2030, which will further reduce CO2.

The first new RGGI member, New Jersey, was an original member of the consortium, but Republican Governor Chris Christie withdrew in 2011, and has vetoed several bills since that would rejoin. The incoming governor, Democrat Phil Murphy, has pledged to rejoin. 

In more exciting news, Virginia is also moving steadily toward joining the RGGI as well.  Gov. Terry McAuliffe issued an executive directive in May directing the Virginia Department of Environmental Quality to develop a rule to limit carbon dioxide from existing power plants. His directive emphasized both designing the rule in such a way to allow Virginia to join a multistate emissions trading group – i.e. the RGGI – AND doing so in such a way that a legislative vote isn’t required.  

The proposed rule was finished in October and received preliminary approval in November from the state air pollution board. Several hurdles remain, but it is on track for adoption by the end of 2018.

Bringing New Jersey back into the RGGI fold is good news and will reinforce the program’s stability and expand its footprint to cover more carbon emissions -- New Jersey will have the second-largest amount of emissions of any of the current members. However, bringing Virginia into the scheme is extremely promising for several reasons.

First, Virginia’s power sector emitted about 34.5 million tons of CO2 equivalent in 2016, which would make it the state with the highest emissions in the RGGI. (current leader New York’s power sector emitted about 29 million tons in 2016) (see searchable EPA’s figures here – look for point sources, by state, and then select “Power Plants").  It would expand the coverage of the program’s cap by about 40 percent.

Second, it would be the first state with a large coal-fired power sector to join; which might provide additional confidence for other states with a  large coal-fired power sector  to join.  Pennsylvania, with more than 80 million tons of CO2 emissions from its power plant sector, would be an obvious candidate to join (assuming some election luck with the legislative branch) as would Illinois and its 69 million tons (assuming we effect an upgrade on current Republican Governor Bruce Rauner).

Finally, Virginia would be the first state in the traditional South to join, which breaches an important psychological wall. Sure, Virginia is changing rapidly, but North Carolina and Georgia seem to be following the same path, albeit at a somewhat slower pace. Both have some very large coal plants that would benefit from putting a price on carbon.

There are two final important lessons from this hopeful sequence playing out in the Mid-Atlantic.

First, as always, elections matter. Electing Republican Christie in 2009 led to New Jersey’s withdrawal from the pact, while electing Democrat Murphy a month ago, removed the road block from getting the state back in. Electing McAuliffe in 2013 imbued Virginia with the administrative urgency to regulate carbon emissions, and electing his fellow Democrat Ralph Northam a month ago to succeed him gave those regulations the ability to survive.

Elections in Illinois and Pennsylvania and other Midwestern states may offer an opportunity to drastically expand RGGI after 2018.

Second is that given time, space and attention, smaller policy initiatives can grow in scope and effectiveness to become much more comprehensive.  RGGI got off to something of a rocky start in 2008, as the price for emissions stayed much lower than projected due to that year’s economic collapse and faster-than-expected growth from renewable energy. 

But states learned from the initial growing pains. During the 2012 program review, state regulators started filling in gaps: They tightened the cap to account greater-than-expected reductions in emissions, raised the price floor, and closed several other loopholes to lock-in achieved emission reductions and accelerate future ones. 

Better yet, states are closing in on an agreement to strengthen the program again for the decade between 2021 and 2030, further speeding emission reductions.

Best of all, many of the RGGI states are seriously lookingto expand the program’s scope beyond power plants to transportation – the other major sector of greenhouse gas emissions. 

So, keep an eye on them -- but have some faith in your regulators. And keep working hard to elect politicians who will empower them to design strong pollution-control programs.