The post-election outlook for regional cap-and-trade
So onlookers expect the program to hum along. Pollution permits so far have been surprisingly cheap ($1.86 per ton in the latest auction), which means companies owning coal plants are finding it easier to buy permits than clean up dirty plants. The program was designed to start cautiously, and targets become stronger in 2014.
At least 25 percent of revenue generated by RGGI’s auctions is supposed to go to energy-efficiency programs, but New York, New Jersey, and New Hampshire have raided their RGGI funds to plug holes in their budgets. Still, more of the $729 million raised has gone toward protecting ratepayers through efficiency investments. In Delaware, 15 percent of auction proceeds help low-income consumers seal their homes through a Weatherizing Assistance Program. In Maryland, auction proceeds are funding a weatherization workforce training program at 13 community colleges.
With California voters affirming the state’s landmark climate plan by the widest margin of any vote in the state last week (22 points), it’s set to launch cap-and-trade in 2012. Unlike RGGI’s power-plant-only focus, California will address manufacturing and, in 2015, transportation fuels. It would be, as Brad Plumer puts it, the real thing. And in governor-elect Jerry Brown (D), the state will have a leader who’s eager to enact it.
The original plan for the Western Climate Initiative was to have seven states and four Canadian provinces jump into cap-and-trade together, but California
may not have much company at first. A governor-appointed board in New Mexico signed up for the plan last week, but incoming Republican Gov. Susana Martinez opposes it and will try to block that move. Washington and Oregon have Democratic governors who support the cap-and-trade plan, but their legislatures refused to sign off on joining it even before they gained new Republican members last week. Arizona Gov. Jan Brewer (R) supports some of the WCI’s non-cap-and-trade programs, like energy efficiency and clean fuels measures, but issued an executive order in February pulling her state out of the cap-and-trade plan.
California’s most likely partners are the Canadian provinces Ontario, Quebec, and British Columbia; B.C. already has a carbon tax that could be integrated into the program. It’s possible Colorado could join under the new leadership of clean-energy backer John Hickenlooper (D), although when Grist asked him about WCI over the summer, he wouldn’t say whether he supported it.
Golden of Climate Solutions said more states could join if California’s launch goes well in 2012. “California leads because it’s a trend-setter and a big economy, but also in this case because it has the strength and depth in its agencies to do the heavy lifting it takes to pass a law like this, work out all the kinks, and defend it legally,” he said. “That sort of paves the way for other states to move forward.”
Republicans made big gains in the Midwest last week, which lowers the odds that the Midwest Greenhouse Gas Reduction Accord will grow into a functional cap-and-trade system. Not that it was making much progress anyway.
The accord, a younger project than RGGI and the Western initiative, was a collaboration of governors who have already left office or will finish their terms next month — Kathleen Sebelius (D) of Kansas left to join President Obama’s cabinet; Rod Blagojevich (D) of Illinois left to make a fool of himself; Jennifer Granholm (D) of Michigan was term-limited; and Tim Pawlenty (R) of Minnesota abandoned his clean-energy support to position himself for a presidential run.
They’ll be replaced by a crop of fossil-fuel defenders including Sam Brownback (R) in Kansas, Scott Walker (R) in Wisconsin, and John Kasich (R) in Ohio (which hasn’t been part of the accord and definitely won’t be now). Midwestern clean-energy advocates are hopeful they’ll have success working with Republicans Rick Snyder of Michigan and Terry Branstad of Iowa, although the accord isn’t likely to get much attention.
“I think that action on the climate portion of the accord is going to be stalled for a while,” said Howard Learner, a former Obama campaign advisor and president of the Environmental Law and Policy Center in Chicago. “[New governors] are going to be focused on budget crises in their states, getting cabinet members and department heads in place, and dealing with whatever legislation comes up right away. There’s only so much oxygen in the room.”
RGGI shows that regional cap-and-trade can raise money to help fill budget gaps, but it’s not a quick solution to shortfalls. Governors aren’t likely to make a difficult push to get their legislatures to approve the accord — at least not in the next few years, Learner said.
Svenson of PSEG in New Jersey, a company that owns both low-emission nuclear plants and heavy-emission coal plants, said it’s not encouraging that governors “might” consider starting up cap-and-trade plans in a few years. He’d like to see those programs launching and linking together now — or, better yet, see them replaced by a unified national program.
“Our hope was that we would’ve seen national legislation by now,” Svenson said. “I keep coming back to this: Climate change is real. We really do believe that human activities are the cause. And delayed action on addressing this is only going to cost us all more money.”