Massachusetts has finalized RGGI regulation amendments to implement a new emissions cap of 91 million tons per year, starting in 2014.
On December 9, 2013, the Massachusetts Department of Environmental Protection (DEP) issued final amendments to the Regional Greenhouse Gas Initiative (RGGI) regulations of the Commonwealth of Massachusetts. Pursuant to the RGGI Updated Model Rule announced on February 7, the amendments will lower the current RGGI emissions cap from 165 million tons per year to 91 million tons per year. Thereafter, the cap will decline at 2.5 percent per year through 2020 to achieve 50 percent emissions reductions relative to 2005. The tougher cap is expected to generate more than $8B in economic benefits across the region.
RGGI, the nation’s first mandatory emissions trading program, was established in 2005 to reduce regional power sector emissions by 10 percent by 2018, relative to 1990 levels. Its nine member states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont – developed a regional emission control strategy, including a multi-state cap-and-trade program that began capping electric power generator emissions from 2009. Massachusetts’ Green Communities Act, signed by Massachusetts Governor Deval Patrick in July 2008, approved the state’s RGGI participation. Between 2009 and 2011, RGGI increased regional net economic output by $1.6B including $500M in economic benefits in Massachusetts.
New RGGI Emissions Cap (RGGI, MA DEC)
Since 2005, RGGI states have achieved approximately 40 percent emissions reductions. Though the new cap will potentially raise carbon allowance prices, RGGI revisions include a cost containment reserve (CCR) to stabilize allowance prices during unexpected circumstances, such as natural gas shortage. The CCR would contain a fixed number of allowances that can be offered if allowance prices exceed certain levels.
DEP expects the new cap to add an estimated $350M to Massachusetts economy by 2020. The revenues will be invested in energy efficiency improvement programs across the state. According to RGGI, the new cap will have minimal impact on consumers, raising electricity bills by less than one percent. In Massachusetts, the average monthly residential electric bill of $72 will increase by 39 cents, commercial electric bill of $455 will increase by $3.89, and industrial bill of $6,659 will increase by $83 under the new cap.
December 10, 2013 via Energy Solutions Forum
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