Massachusetts Rejoins Regional Greenhouse Gas Initiative

January 19, 2007

Newly elected Massachusetts Governor Deval Patrick signed a Memorandum of Understanding on January 18 that brings the state back into the Regional Greenhouse Gas Initiative (RGGI). The state will raise funds for energy efficiency and renewable energy programs by auctioning all of its allowances under the initiative’s cap-and-trade program.

The initiative involves seven northeast states that have agreed to participate in a regional cap-and-trade program to reduce emissions of carbon dioxide (CO2) from electric power generators by 10 percent by 2019. (For background information on the creation of RGGI, see the August 23, 2006 article in EERE Network News.) Massachusetts and Rhode Island participated in the development of RGGI until they withdrew from the pact in mid-December 2005.

However, in a January 18 press release, Patrick said, "Climate change is one of the most pressing challenges of our time. On this day we want everyone to know that Massachusetts will not stand on the sidelines."

Under RGGI, Massachusetts’ annual emissions of CO2 from power plants of 25 megawatts (MW) or larger will be capped at approximately 26 million tons statewide from 2009 through 2014. After that, emissions will be reduced by 2.5 percent per year for the next 4 years. Under this cap, each state is given allowances for its emissions. Electricity generators will need an allowance for each ton of CO2 they emit.

Each state has discretion as to how it distributes these allowances. It can allocate them to generators for free, based on their past role in the energy marketplace, sell them by auction, or do a combination of the two — but RGGI stipulates that at least 25 percent of allowances be allocated "for a consumer benefit or strategic energy purpose."

Patrick said that Massachusetts will auction 100 percent of its allowances, and use the funds generated by those sales — an estimated $25 million to $125 million per year — to fund energy efficiency, demand reduction, renewable energy programs, and combined heat and power projects. To maximize rate reduction, funds will be used for a program to manage peak demand for electricity, lowering electric bills for consumers. Customers will have incentives to use technologies such as automatic lighting and air conditioning controls that can help minimize peak-time usage.

Patrick has begun a cabinet reorganization that combines energy and environmental agencies into a single department. In the press release he stated, "The challenge of climate change illustrates vividly the need to integrate energy and environmental policy."

For more information, see the governor’s January 18 press release.

Source: January 19 article in Wind Energy Weekly