Regional Greenhouse Gas Initiative Third Program Review

Roger Caiazza

The Regional Greenhouse Gas Initiative (RGGI) is a carbon dioxide control program in the Northeastern United States.  One aspect of the program is a program review that is a “comprehensive, periodic review of their CO2 budget trading programs, to consider successes, impacts, and design elements”.  Because it is often cited as a successful cap and invest control program it is worthwhile to review the status of the Third Program Review after the March 29, 2023 public meeting.

Background

RGGI is a market-based program to reduce greenhouse gas emissions. According to RGGI:

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia to cap and reduce power sector CO₂ emissions. 

RGGI is composed of individual CO₂ Budget Trading Programs in each participating state. Through independent regulations, based on the RGGI Model Rule, each state’s CO₂ Budget Trading Program limits emissions of CO₂ from electric power plants, issues CO₂ allowances and establishes participation in regional CO₂ allowance auctions.

Proponents tout RGGI as a successful program because participating states have “cut carbon pollution from their power plants by more than half, improved public health by cutting dangerous air pollutants like soot and smog, invested more than $3 billion into their energy economies, and created tens of thousands of new job-years”.  Others have pointed out that RGGI was not the driving factor for the observed emission reductions.  My latest evaluation of RGGI results found that the investments from RGGI auction proceeds were only directly responsible for 6% of the total observed annual reductions over the baseline to 2020 timeframe and that those investments reduced emissions at a rate of $818 per ton of CO2.  The primary driver of observed reductions was cost-efficient fuel switching from coal and residual oil to natural gas not RGGI.  I concluded that RGGI successfully raised money but has not provided cost-effective emission reductions or has had much to do with the observed CO2 emission reductions in the electric generating sector of the NE United States.

Third Program Review

The RGGI states periodically review the “successes, impacts, and design elements” of the program.  On March 29, 2023 RGGI Inc. and the participating states gave an update on the status of the third program review.  The presentation gave an overview of the program, explained how the review process works, described state activities, and described the electric sector analysis.  Meeting materials including comments submitted after the meeting are available:

• Meeting Agenda
• Presentation Slides
• Meeting Recording – Session 1
• Meeting Recording – Session 2
• Public comments for the meeting

The March 29 public meeting was more of an overview than anything else.  Nonetheless a couple of interesting points made.  The overview emphasized that program components allow for regional compatibility because each state has its own implementing regulations.  I believe this is recognition of the fact that different state emission targets need to be considered in the program more than in the past.  There is a new environmental justice (EJ) component that includes a regional CO2 mapping tool.  I think this component will be of particular interest to WUWT readers because EJ considerations are a component of all recent environmental initiatives.

The primary technical considerations for the planned program review modeling are the regional cap trajectory, Cost Containment and Emissions Containment Reserves changes, and  adjustments for banked allowances.  This round of modeling must contend with the “fluidity of state participation” which translates to what to do about Pennsylvania and Virginia.  Pennsylvania participation is “still in effect” but it is still in litigation so there is a major uncertainty relative to the modeling.  Virginia is going to cease participation at the end of 2023 and they have told RGGI that their participation should not be included in the modeling.  The emissions from these two states are a significant portion of the current inventory so participation affects the potential for regional emission reductions as shown in the following table.  In 2022 Pennsylvania emissions were 42.5% of the total CO2 emissions of all RGGI states and Virginia was another 13% as shown below. From the standpoint of potential emission reductions note that Pennsylvania still had a significant amount of coal in 2022.  Note that the recently announced retirement of Homer City will result in a 2% reduction of overall RGGI emissions.

There are two other factors that complicate this modeling effort.  The presentation noted that “climate and complementary energy policies will dramatically impact electricity load”.  In other words, when transportation and residential/commercial  energy use is converted to electricity the load will go up. In addition, the decarbonization timeline for the electricity sector in states vary.  The presentation also highlighted the implementation of offshore wind deployment and grid-scale battery storage deployment, duration, and supply as factors that add challenges and uncertainty to the modeling.

In order to address these issues, they are looking at different ways of dealing with the uncertainty by developing “assumption sets based on load forecasts and availability of low-emitting generation” and various allowance supply scenarios.  They think that adding cases will cover the range of outcomes given current electricity-sector developments and that the “results will inform development of potential policy cases”.

The load forecast and availability of low-emitting generation discussion (video at 21:20) provides the modeling framework.  As shown in the slide below they are considering three assumption sets ranging from “procured” clean energy and energy forecasts in line with ISO baseline estimates to two levels of additional clean energy and load growth.  I think this is particularly important because the timelines have major implications.  An increasingly large percentage of future electric generation unit emission reductions is only possible if clean energy deployment displaces fossil generating facilities.  There are significant uncertainties associated with clean energy development because of supply chain issues, lack of experienced personnel, and the need for extensive supporting infrastructure.  If allowance supply trajectories presume greater displacement of emitting sources than occurs, then there will not be enough permits to emit which could lead to artificial energy shortages.  The assumption sets should consider those timing issues.

Stakeholder Comments

Four specific questions for input from stakeholders were posed (video at 30:19)

• How comfortable are you with the assumptions that have been included?
• Are there other assumptions that need to be included in these scenarios?
• Is there anything that we can do to improve the understanding of the differences between the cases?
• For which scenarios are stakeholders most interested in seeing results for further Program Review consideration?

Written comments were submitted in response to the request for input from, an emissions trading group, an organization representing New York generating companies, one individual (that would be me), one affected generating company, and six environmental/social justice organizations.  The International Emissions Trading Association (IETA), Environmental Energy Alliance of New York, and myself addressed the specific questions raised as the primary focus.  LS Power Development mentioned the questions asked but was more interested in furthering their own renewable energy development agenda.  The six environmental/social justice organizations (Alternatives for Community & Environment et al., Conservation Law Foundation et al., Earthjustice et al., Environmental Defense Fund, Interreligious Eco-Justice Network et al., and RGGI Advocates Coalition) were primarily concerned with the EJ component.

RGGI Environmental Justice

Environmental justice (EJ) is a featured component of recent environmental policies. It also is a feature of the Green New Deal that “has been used to describe various sets of policies that aim to make systemic change”.  In my opinion the rationale that the transition away from fossil fuels is required is only  a pretext for all the systemic changes desired by advocates who are a primary constituency of the Progressive Democrats.  The question is how do these factors get integrated into environmental policy.

Democrats are not the only ones trying to cater to “environmental justice communities, tribal groups, the labor sector, and other equity groups” that the Conservation Law Foundation mentions in its comments.  It turns out that the big green environmental organizations are going out of their way to cater to these groups as part of a larger goal to impact the nation’s culture.  Environmental organizations are trying to align with social justice organizations to strengthen their bona fides with the Progressives.  The Acadia Center report RGGI Findings and Recommendations for the Third Program Review was referenced by four of the six organizations so I will use it to illustrate the objectives.  .

The Acadia report claims that RGGI states have experienced both a more rapid increase in GDP per capita and a more rapid decline in both power sector CO2 emissions and retail electricity prices relative to other states.  I am not going to address this because I don’t have time and it does not directly address the EJ concerns.  Instead consider the following quotes from the Executive Summary:

The objective of RGGI is, first and foremost, reducing greenhouse gas emissions while supporting economic growth. Although RGGI is not directly an air quality program, because it applies to power plants, it can be an effective vehicle to deliver reductions in criteria air pollutants and better outcomes to communities that are located near power plants. RGGI has delivered important ancillary benefits like an 85% reduction in nitrogen oxides (NOx) in RGGI-regulated power plants over the entire region. Criteria emissions, particularly NOx, can have significant detrimental health impacts including damaging the respiratory tract and increasing vulnerability to respiratory infections and asthma.

In order to connect GHG emission reductions with immediate effects, the relationship with other air pollutants is used.  As mentioned previously RGGI was not the primary driver for the CO2 reductions observed and the situation is the same for NOx.  Moreover, during this period there were NOx-specific control programs that contributed to the observed reductions

However, the approach of reducing CO2 emissions in aggregate across the region does not necessarily result in a more rapid rate of decline in NOx emissions in EJ communities compared to other areas. Acadia Center analysis found that, between 2008 and 2021:

• NOx emissions from power plants within 3 miles of a community with high EPA Environmental Justice Socioeconomic Indicators (“EPA EJSI community,”see sidebar for more information) declined by 85%, compared to the rest of the RGGI power plant fleet, where NOx emissions declined by 88%
• Over a third of RGGI plants that are releasing NOx emissions near communities suffering from disproportionately high rates of asthma
• Over two-thirds of RGGI plants do not have any active air quality monitoring sites within a 3-mile  radius to measure the impact on neighboring communities – and over three quarters of these unmonitored plants are located near an EPA EJSI community or high asthma communities (see the highlight at the end of this section for more details on both community classifications)

Organizations like the Acadia Center are selectively choosing what information to present both in these comments and to the environmental justice community.  The suggestion that there is a significant difference between communities within three miles of a power plant with “only” an 85% decrease as compared to an 88% decrease elsewhere suggests greater accuracy than warranted.  Unremarked is whether the 85% reduction in emissions had any observable effect on the asthma rates.  I would be more sympathetic if they could show a relationship.  In order to prove or disprove the relationship claimed emissions are only part of the picture.  The bigger point is that NOx impacts are local and must be assessed using air quality modeling. The final bullet about air quality monitoring is a bogus argument.  State and Federal air quality monitoring programs have a long history.  Every power plant in the country has been modeled to confirm local air quality impacts do not exceed the National Ambient Air Quality Standards and most also had an ambient air quality monitoring network at one time to verify that the modeling was correct.  I know this because I did work as a consultant to EPA evaluating the models using the monitoring data and later was responsible for monitoring networks at four power plants.  The bottom line is that the history of modeling and monitoring is so extensive that if there was any question that there could be an issue with these facilities, then it was laid to rest long ago.  That is why there are no nearby air quality monitors today.  Despite this history one of the EJ recommendations is to do community air quality modeling which I believe is not up to the same standard as regulatory air monitoring programs.

In addition to the demand for local air quality monitoring, commenters argued that more public participation is necessary.  For example, the Conservation Law Foundation comments argued that “It is imperative that equity and environmental justice considerations be more thoroughly integrated into modeling, rather than treated as a separate issue for resolution”.  They went on to suggest:

More specifically, the RGGI program and the RGGI Program Review process must be reformed to improve the amount and quality of public participation, develop and conduct equity analyses, and increase investments in overburdened communities.

We must ensure that environmental justice communities, tribal groups, the labor sector, and other equity groups have access to the financial and technical resources they need to meaningfully participate in the RGGI Program Review process. RGGI, Inc. can accomplish this by publishing public notices of RGGI Program Review meetings and comment periods more widely, including by social media and using physical notices in high-traffic gathering places such as grocery stores and community centers.

Color me skeptical but I doubt that any individual who hears about RGGI public meetings from a public notice posted in a grocery store is going to be able to provide meaningful comment on the design elements of RGGI.   The suggestion that these groups have “access to the financial and technical resources” necessary to participate seems to be a recommendation designed to garner funding so the environmental organizations can, for example, “develop and conduct equity analyses” for problems that the environmental justice communities did not even know they had. 

The other major component in the EJ comments was a recommendation to allocate a major share of the proceeds in the disadvantaged communities.  The Conservation Law Foundation comments state that “By taking the funds received from RGGI and reinvesting them in communities most unduly burdened by lack of resources, unequal access to energy infrastructure, and who pay a disproportionate amount of their income to necessities such as utility bills, these monies can have an additive effect that will help to accelerate state and federal decarbonization goals in a just and equitable manner.”  In my opinion these organizations are doing a dis-service to these communities by pushing these decarbonization goals despite over-whelming evidence that the costs to decarbonize are enormous.  I cannot imagine that investments in energy efficiency, retrofitting and electrifying homes in these areas, and providing other energy reduction measures in these communities will offset the increased costs to those least able to afford them.

Conclusion

The third RGGI program review process has some difficult technical issues to address.  At the top of the list is that in order to further reduce electric generation CO2 emissions it is necessary to rely on wind and solar resources to displace the need for the existing units to operate as much.  If the future RGGI allowance caps don’t consider the feasibility of the transition to alternative generation, then it is possible that the caps will limit generation simply because in the absence of permits to emit aka allowances, the only way for an affected source to comply with the regulations is to stop running.

In order to address this concern, the feasibility of the wind and solar implementation schedule should be assessed and consider supply chain, trained personnel, and permitting limitations.  Obviously, the costs are also a factor.  There is an unrecognized RGGI auction revenue dynamic between the need to invest in the control strategies that reduce emissions and the demands of the environmental activists claiming to act in the best interests of the disadvantaged communities.  The money spent on community air quality monitoring, reaching out to EJ communities, and evaluating equity access all do not reduce CO2 emissions directly or indirectly by reducing energy use.  If too much money is spent on programs that do not lead to emission reductions, then the necessary investments won’t be made and the targets won’t be met.

The addition of the environmental justice component to the program review is a diversion to the RGGI CO2 emission reduction efforts.  I think an emphasis on energy efficiency and energy conservation efforts in disadvantaged communities is necessary to limit the effect of the transition to more expensive electricity.  However, RGGI auction funding should prioritize emission reductions over funding any other EJ programs that do not reduce emissions.  The state emission reduction targets are arbitrary and failing to consider technical feasibility and the funding necessary to provide zero-emissions resources to displace energy from the RGGI-affected sources will not end well.

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Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  He blogs about the RGGI program because he has been involved with it since its inception and nobody else apparently wants to review it.   This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.