Tuesday, January 31, 2012

The Success of RGGI Carbon Trading Shows Cap-and-Trade Works

Despite opposition from Republicans, the Regional Greenhouse Gas Initiative (RGGI) has been shown to be very successful. A January 28th New York Times article reviewed RGGI a carbon trading initiative launched by ten northeastern states in January 2009. According to independent reports the emissions reductions have been greater and cheaper than expected, and have produced substantial fringe benefits in terms of lower overall electricity costs, more jobs, and greater regional independence of fossil fuel imports.

The RGGI cap-and-trade carbon trading scheme was based on the successful initiative to reduce emissions of acid rain precursor aerosols which in the 1980s and 1990s achieved significant reductions in SO2 and NOx emissions.

Republicans who once supported cap-and-trade decided to make the issue a political football and as part of their obstructionist approach they now rail against it. Although New Jersey Governor Chris Christie withdrew from RGGI, independent studies confirm it is clearly working well.

Since its inception in 2009, Northeastern greenhouse gas emissions have been reduced by 30 percent. This is largely due to switching from coal to natural gas reduced demand brought on by the recession. On its own the RGGI trading system accounts for 6 percent of these emissions reductions.

An independent assessment by the Analysis Group further indicated that RGGI has saved customers money and created jobs. Participating states have used proceeds from the auctions to promote energy efficiency and electricity generation from renewables. The study, commissioned by four nonprofit foundations and conducted by the Boston consulting firm Analysis Group.

These findings demonstrate that carbon trading under a cap-and-trade system is the best way to use the free market to reduce emissions in a way that minimizes harm to the economy. When the review period comes to an end in the summer 2012 it will likely be declared a success and be subject to more stringent cuts and more widespread adoption. This is great news for the environment and the economy.

Research shows that Republicans are on the wrong side of this issue as the RGGI program illustrates that the benefits of carbon trading far outweigh the costs.

© 2012, Richard Matthews. All rights reserved.

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